VISIONshezan.pk/wp-content/uploads/2015/08/Shezan-AR-30-June...The share transfer books of the...

To be known as leader of quality products in the region.

Dedication to quality is a way of life at our Company, so much so that it goes far beyond rhetorical slogans. It is the objective of Shezan International Limited to produce and provide products and services of the highest quality. In its activities the Company will pursue goals aimed at the achievement of quality excellence and succeed as a profitable business. These results will be derived from the dedicated efforts of each employee in conjunction with supportive participation from management at all levels of the Company.

To play its role in the economic development of the country and to enhance quality of life of its people.

VISION

Our mission is to provide the highest quality fruit and vegetable related juices and products to retail and food service customers. We want to be the recognized industry leader in quality and service, providing more than expected for our customers, employees and stakeholders.

We will accomplish this by maintaining a tradition of pride in our products, growth through innovation, integrity in the management of our business, commitment to Team Management and the Quality Improvement Process.

MISSION

CONTENTS03Company Information

09Directors’ Report to the Members

22Review Report to the Members

26Balance Sheet

29Statement of Changes in Equity

05Notice of Meeting

18Pattern of Shareholdings

23Statement of Compliance

27Statement of Comprehensive Income

30Notes to the Financial Statements

08Review Report by the Chairman

21Six Years Review at a Glance

25Independent Auditors’ Report to the Members

28Cash Flow Statement

59Proxy Form

1ANNUAL REPORT 2017

Board of Directors:

Mr. Muneer Nawaz ChairmanMr. Humayun A. Shahnawaz Chief ExecutiveMr. Mahmood NawazMr. M. NaeemMr. Rashed Amjad KhalidMrs. Manahil ShahnawazMr. Saifi Chaudhry (Independent Director)Mr. Syed Etrat Hussain Rizvi (N.I.T. Nominee)

Chief Financial Officer & Company Secretary:

Mr. Faisal Ahmad Nisar, FCA

Audit Committee:

Mr. M. Naeem ChairmanMr. Muneer Nawaz MemberMr. Rashed Amjad Khalid MemberMr. Saifi Chaudhry Member

Human Resource & Remuneration Committee:

Mr. Muneer Nawaz ChairmanMr. M. Naeem MemberMr. Humayun A. Shahnawaz Member

Registered Office / Head Office:

56 - Bund Road, Lahore-54500.Phones: (042) 37466900-04.Faxes: (042) 37466899 & 37466895.E-mail: [email protected]

Factories:

• 56 - Bund Road, Lahore - 54500. Phones: (042) 37466900-04. Faxes: (042) 37466899 & 37466895. E-mail: [email protected]

• Plot No. L-9, Block No. 22, Federal “B”, Industrial Area, Karachi-75950. Phones: (021) 36344722-23. Fax: (021) 36313790. E-mail: [email protected]

• Plot No. 33-34, Phase III, Hattar Industrial Estate, Hattar. Phones: (0995) 617158 & 617343. Fax: (0995) 617342. E-mail: [email protected] Website:

www.shezan.com

Auditors:

EY Ford Rhodes, Chartered Accountants,96-B-1, 4th Floor, Pace Mall Building,M. M. Alam Road, Gulberg II, Lahore.

Share Registrar:

Corplink (Private) Limited,Wings Arcade, 1-K, Commercial,Model Town, Lahore.

Legal Advisors:

Cornelius, Lane & Mufti,Nawa-e-Waqt Building,Shahrah-e-Fatima Jinnah, Lahore.

Bankers:

United Bank Limited.MCB Bank Limited.National Bank of Pakistan.The Bank of Khyber.Bank Al-Habib Limited.Habib Bank Limited.Bank Alfalah Limited.JS Bank Limited.

COMPANY INFORMATION3ANNUAL REPORT 2017

The 54th Annual General Meeting of the Company will be held on 27 October 2017 at 11:00 a.m. at Avari Hotel, 87-Shahrah-e-Quaid-e-Azam, Lahore, to transact the following businesses:

NOTICE OF MEETING

ORDINARY BUSINESS

1. To confirm the minutes of the Extraordinary General Meeting of the Company held on 21 June 2017.

2. To receive and adopt the Audited Financial Statements of the Company for the year ended 30 June 2017 together with the Directors’ and Independent Auditor’s Report thereon.

3. To consider and, if thought fit, approve the cash dividend @ Rs. 13.50/- per share, i.e., 135%, as recommended by the Board of Directors, for the year ended 30 June 2017.

4. To appoint External Auditors of the Company for the financial year ending 2017-18 and to fix their remuneration.

SPECIAL BUSINESS

5. To consider, and if thought fit, to pass the following resolution as a Special Resolution:

“RESOLVED THAT the transactions carried out by the Company in the normal course of business with related parties for the period from April 01, 2017 to June 30, 2017 be and hereby ratified, approved and confirmed.”

“FURTHER RESOLVED THAT the Chief Executive Officer of the Company be and is hereby authorized to approve all the transactions carried out and to be carried out in the normal course of business with related parties till the next Annual General Meeting of the Company and in this connection the Chief Executive Officer of the Company be and is hereby authorized to take any and all necessary actions and sign/execute any and all such documents/indentures as may be required in this regard on behalf of the Company.”

ANY OTHER BUSINESS

6. To transact any other business with the permission of the Chair.

STATEMENT OF MATERIAL FACTS

Under section 134(3) of the Companies Act, 2017

A Statement required under this section relating to Special Business of agenda items No. 5 is appended to the Notice of this Meeting being sent to the shareholders of the Company by post.

By Order of the Board

Karachi: Faisal Ahmad Nisar26 September 2017. Company Secretary

5ANNUAL REPORT 2017

NOTICE OF MEETING

Notes:

1. The share transfer books of the Company will be closed from October 21, 2017 to October 27, 2017 (both days inclusive), for determining the entitlement of dividend.

2. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote on his/her behalf. Form of proxies, in order to be valid, must be received at the Registered Office of the Company, Shezan International Limited, 56 Bund Road, Lahore, not less than 48 hours before the meeting.

3. No person shall act as proxy unless he/she is a member of the Company, except that a corporation may appoint a person who is not a Member.

4. Signature of the shareholder on proxy form must agree with the specimen signature registered with the Company. For the convenience of the shareholders, a proxy form is attached with this annual report.

5. Shareholders are requested to immediately notify the Company of any change in their address to our Share Registrar, M/s. Corplink (Private) Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore and email: [email protected].

6. CDC Account Holders will further have to follow the under mentioned guidelines as laid down by the Securities & Exchange Commission of Pakistan.

(A) For attending the meeting:

i. In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations, shall authenticate identity by showing their original National Identity Card (CNIC) or original passport at the time of attending the meeting.

ii. In case of corporate entity, the Board of Directors’ Resolution/Power of Attorney with specimen signature of the nominee shall be produced (unless, it has been provided earlier) at the time of attending the meeting.

(B) For appointing proxies:

i. In case of individuals, the account holder or sub-account holder and/or the persons whose securities are in group account and their registration details are uploaded as per the Regulations, shall submit the proxy form as per the above requirement.

ii. Attested copies of CNIC or the Passport of the beneficial owners and the proxy shall be furnished with the Proxy Form.

iii. The proxy shall produce his/her original CNIC or Passport at the time of the meeting.

iv. In case of Corporate entity, the Board of Directors’ Resolution/ Power of Attorney with Specimen signature of the person nominated to present any vote on behalf of corporate entity, shall be submitted (unless, it has been provided earlier) along with the Proxy Form to the Company.

7. Pursuant to the provisions of the Finance Act, 2017 with regards to deduction of income tax for cash dividend, the rates of deduction of the income tax, under section 150 of the Income Tax Ordinance, 2001 are as follows:

i. Rate of tax deduction for filer of income tax returns 15 %ii. Rate of tax deduction for non-filer of income tax returns 20 %

All the shareholders whose names are not entered into the Active Taxpayers List (ATL) provided on the website of the Federal Board of Revenue (FBR), despite the fact that they are filers, are advised to make sure that their names are entered into ATL before the date of issuance of dividend warrants, otherwise tax on their dividend will be deducted @ 20% instead of 15%. As per FBR's clarification, the valid Exemption Certificate under Section 159 of the Income Tax Ordinance, 2001 is mandatory to claim exemption of withholding tax under Clause 47B of Part-IV of Second Schedule to the Ordinance. Those who fall in the category mentioned in above clause must provide valid Income Tax Exemption Certificate to our Share Registrar; otherwise income tax will be deducted on dividend amount as per rates prescribed in Section 150 of the Ordinance

In case of joint account, each account holder is to be treated individually as either a filer or a non-filer and income tax will be deducted on the basis of shareholding of each joint holder as may be notified by the shareholder, in writing as follows, to the Company by sending following details on the registered address of the Company and the members who have deposited their shares into Central Depository Company of Pakistan Limited (CDC) are requested to send a copy of detail regarding income tax payment status also to the relevant member of stock exchange and CDC, if maintaining CDC investor account, or if no notification, each joint holder shall be assumed to have equal number of shares.

76 ANNUAL REPORT 2017

Company Name Folio / CDS Account No. Total Shares Principal Shareholder Joint Shareholder

Name andCNIC No.

Name andCNIC No.

ShareholdingProportion( No. of Shares)

Shareholding Proportion( No. of Shares)

The CNIC number / NTN detail is now mandatory and is required for checking the income tax status as per the Active Taxpayers List (ATL) issued by the Federal Board of Revenue (FBR) from time to time.

8. In order to comply with the requirement of Securities & Exchange Commission of Pakistan (SECP) SRO 19(I) / 2014 dated 10 January 2014 & SRO 275(I) / 2016 dated 31 March 2016, those Shareholders who have not yet submitted attested copy of their valid CNIC, are once again requested to provide the same with their folio number to the Company Share Registrar.

9. In accordance with the provisions of Section 242 of the Companies Act, 2017 and Circular No. 18/2017, a listed company, is required to pay cash dividend to the shareholders ONLY through electronic mode directly into the bank account designated by the entitled shareholders. In compliance with the said law, in order to receive your future dividends directly in your Bank account, you are required to provide the information mentioned on the Form placed on the Company's website www.shezan.com and send the same to your brokers/the Central Depository Company. if the shares are held in the electronic form or to the Company's Share Registrar if the shares are held in paper certificate form. The Company's Share Registrar address is: M/s. Corplink (Private) Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore and email: [email protected].

10. The audited financial statements of the Company for the year ended 30 June 2017 have been made available on the Company’s website (www.shezan.com) in addition to annual and quarterly financial statements for the current and prior periods.


As required under the Code of Corporate Governance, an annual evaluation of the Board of Directors of Shezan International is carried out. The purpose of this evaluation is to ensure that the Board’s overall performance and effectiveness is measured and bench marked against expectations in the context of the objective set for the Company.

For the financial year ended 30 June 2017, the Board’s overall performance and effectiveness has been assessed as satisfactory. Improvement is an ongoing process leading to action plans. The overall assessment as satisfactory is based on an evaluation of integral components, monitoring the organization’s business activities; monitoring financial resource management; effective fiscal oversight; equitable treatment of all employees and efficiency in carrying out the Board’s business.

The Board of Directors of your company received agenda and supporting written material including follow-up material in sufficient time prior to the Board and its committee meetings. The Board meets frequently enough to adequately discharge its responsibilities. The non-executive and independent directors are equally involved in important decisions.

Karachi: Muneer Nawaz26 September 2017. Chairman

REVIEW REPORT BY THE CHAIRMAN


On behalf of the Board of Directors, we are pleased to present you the Audited Financial Statements of the Company for the year ended 30 June 2017.

ECONOMIC OVERVIEW

Economy of Pakistan has continued the growth momentum as the GDP growth reached to 5.28 percent in 2016-17 which is the highest in 10 years, on the back of robust growth in agriculture which registered a growth of 3.46 percent against the growth of 0.27 percent last year. Industrial sector witnessed the growth of 5.02 percent against 5.80 percent last year, large scale manufacturing posted growth of 4.61 percent against 3.29 percent last year.

Keeping in view the macroeconomic stability, SBP kept the policy rate at 5.75 percent in May 2016 and maintained the same in the subsequent monetary policy decisions, which is the lowest rate since early 1970s. This was particularly helpful for private sector credit expansion. The Credit to Private Sector (CPS) witnessed growth of 65 percent during fiscal year 2017. This credit expansion is instrumental in bolstering further productivity growth in the manufacturing sector.

Given these positive developments, the broad based growth is expected to continue. The country’s outlook is brightened and looks promising on the back of agricultural recovery, rebound in industrial activities and inflow of investment under China Pakistan Economic Corridor (CPEC). The CPEC will not only further develop Pakistan but also strengthen human ties across both sides of the border. Along the CPEC route, new industrial zones will open opportunities for investment, particularly for small and medium sized auxiliary businesses. Joint ventures between Pakistan and Chinese corporations should promote strategic development and mutual assistance. China is rapidly technologically advancing and therefore business collaboration should bring this know how on our door steps. CPEC is not only a short term economic growth booster, but its impact is far reaching and will trickle down in future. The development of infrastructure, energy and communication will provide much needed impetus to the growth of capital formation, productivity growth and employment.

BUSINESS OVERVIEW

During the year, the Company concentrated on focusing leadership. In light of resurgent competition, the Company concentrated on fortifying its core competencies i.e. product quality, communication and distribution channel. These efforts resulted towards robust top line and bottom line growth. We grew our volumes by providing quality products and timely delivery to our customers across the country. We have increased our focus on customer relationships and provided them complete range of our products. Customer satisfaction is our main deliverable and we make things happen through active participation of all our business factions including our sales proficiency together with technical and market penetration. We continue our efforts

to create customized products and to become a customer’s choice in today's competitive world. We believe in our abilities to respond to ever changing customer requirements and are fully committed to our core values. We are proud of our commitment to excel in safety, product quality excellence to our customers for winning their confidence.

We successfully expanded our penetration in key markets by reducing distribution gaps and tapping potential market segments bringing us closer to achieving our goals. Our domestic sales have shown growth trend during the year. We capitalized on different consumer segments and adopted a channel based approach through wholesale, retail sale and general trade by exploring different new avenues.

During the year, our overall export sales showed an upward trend despite economic slowdown in international markets and stiff competition from the other players. We are aligning our capabilities to expand business in the international markets. The Company is continuously engaged in exploring new possibilities and drive excellence in export markets. Our strategy roams around focusing on innovation, expanding product portfolio, improving quality to sustain growth.

OPERATIONAL PERFORMANCE

Summarized operating performance of the company for the year was as follows:

Increase/

2017 2016 (Decrease)

Particulars Rupees in thousand %age

Sales 7,159,015 6,816,540 5.02%

Cost of sales 5,083,750 4,931,776 3.08%

Gross profit 2,075,265 1,884,764 10.11%

Expenses 1,715,224 1,680,969 2.04%

Finance costs 36,419 52,178 (30.20%)

Other income 38,321 51,859 (26.11%)

Profit before taxation 361,943 203,476 77.88%

Net profit after taxation 259,318 194,286 33.47%

Earnings per share (Rs.) 32.47 24.33 33.47%

We are pleased to pronounce our strong profitability growth despite all difficult circumstances and intense competition. The business portrayed encouraging results with 33.47% growth in net profit after tax and posted 5.02% growth in net sales. The 30.20% decrease in finance cost was due to efficient use of borrowed capital and low markup rates.


DIRECTORS’ REPORTTO THE MEMBERS

APPROPRIATIONS

Keeping in view the encouraging financial results, the Board of Directors has pleasure in proposing a cash dividend of 135%, i.e., Rs. 13.50/- per share. Further, the Board has also recommended appropriation of Rs. (thousand) 200,000 from unappropriated profits to General Reserve.

CONTRIBUTION TO NATIONAL EXCHEQUER

During the year, the contribution to national exchequer has increased and the Company paid Rs. 1.575 billion to the government on account of different levies, including sales tax, excise duty and income tax, reflecting our participation in the national economy.

FUTURE PROSPECTS

Due to the prevailing economic policies, a stable macroeconomic environment, with the development of the CPEC, the Company aims to capitalize favorable market conditions through customer engagement and new business development initiatives. We will continue to focus on cost optimization and improve process efficiencies to ensure business sustainability and will deliver consistent growth results in the coming years.

FINANCIAL AND CORPORATE REPORTING FRAME WORK

The Directors are pleased to state that the Company is complying with the provisions of the Code of Corporate Governance as required by Securities and Exchange Commission of Pakistan (SECP).

a. The financial statements prepared by the management of the Company present its state of affairs fairly, the results of its operations, cash flows and changes in equity.

b. The Company has maintained proper books of accounts.

c. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment.

d. International reporting standards, as applicable in Pakistan, have been followed in preparation of financial statements.

e. The system of internal control is sound in design and has been effectively implemented and monitored.

f. There are no doubts on the Company’s ability to continue as a going concern.

g. There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations.

h. Summary of key operational and financial data for the last six years annexed in this annual report.

i. Information about taxes and levies is given in the notes to and forming part of financial statements.

j. Fair value of investments of provident fund as at 30 June 2017 was Rs. 180.803 million.

k. During the year, four Board of Directors meetings were held. Attendance of these meetings was as follows:

Name of Directors No. of Meetings Attended

Mr. Muneer Nawaz 4Mr. Mahmood Nawaz 3Mr. M. Naeem -Mr. Rashed Amjad Khalid 2Mrs. Manahil Shahnawaz 2Mr. Humayun A. Shahnawaz 4Mr. Saifi Chaudhry 3Mr. Etrat Hussain Rizvi 3

Leave of absence was granted to the Directors, who could not attend the board meetings.

During the year, Mr. Munaf Ibrahim (an independent director) resigned from our Board and in his place; the Board co-opted Mr. Saifi Chaudhry as an independent director of the Company. We appreciate the contribution made by Mr. Munaf Ibrahim during his tenure and welcome Mr. Saifi Chaudhry on our Board.

l. Pattern of Shareholdings as on 30 June 2017 and its disclosure according to the requirement of Code of Corporate Governance is annexed to this report.

m. The Directors, Chief Executive, Chief Financial Officer, Company Secretary and their spouses and minor children shareholding and change therein during the year is disclosed in “Categories of Shareholders”.

RELATED PARTY TRANSACTIONS

The Directors confirm the following regarding related party transactions:

That the transactions undertaken with related parties during the nine month period ended 31 March 2017 have been ratified by the Audit Committee, recommended by the Board of Directors and finally approved by the Shareholders in the EOGM held in June 2017. The transactions with related parties for the fourth quarter ended 30 June 2017 have been ratified by the Audit Committee and recommended by the Board of Directors for consideration and approval by the Shareholders in the upcoming AGM.

1. That the amounts or appropriate proportions of outstanding, items pertaining to related parties and receivables/payables from the related parties as on 30 June 2017:

Rupees in thousandName of Related Party Payable Receivable

Shezan Services (Private) Limited 57,430 Nil

Shahnawaz (Private) Limited 81 1

Shahtaj Sugar Mills Limited Nil 173,032

Shahtaj Textile Mills Limited Nil 1

2. There is no other material information pertaining to related party transactions, which is necessary for an understanding of financial statements.


DIRECTORS’ REPORTTO THE MEMBERS

AUDIT COMMITTEE

The Audit Committee met four times during the year under review. These meetings were held prior to the approval of interim results of the Company by the Board of Directors and after completion of external audit. Attendance by each director was as follows:


Mr. Muneer Nawaz 4

Mr. M. Naeem 3

Mr. Rashed Amjad Khalid 2

Mr. Saifi Chaudhry 4

Leave of absence was granted to the Directors, who could not attend the Audit Committee meetings.

HUMAN RESOURCE COMMITTEE

During the year two meetings of the Human Resource & Remuneration Committee were held. Attendance by each director was as follows:


Mr. Muneer Nawaz 2

Mr. M. Naeem 2

Mr. Humayun A. Shahnawaz 1

Leave of absence was granted to the Director, who could not attend the Human Resource Committee meeting.

EVALUATION OF THE BOARD’S PERFORMANCE

The Board has developed a mechanism of annual performance evaluation. Every member of the board ensures his active participation in the meetings of the Board. Detailed discussions are held on strategic matters and clear directions are provided to the management, which are regularly monitored by the board and its committees. The Board ensures that the Company adopts the best practices of the Code of Corporate Governance. The Board also reviews performance of business segments at each quarter with an aim to improve the low performing segments and at the same time further opportunities of growth are emphasized in all profitable segments. Details of Directors’ training programme have been disclosed in the Statement of Compliance with the Code of Corporate Governance.

ELECTION OF DIRECTORS

During the year, fresh election of Directors of the Company was conducted on 21 June 2017 in pursuance of the requirements of listing regulations of the Stock Exchanges and the new Board has been elected for the next term of three years effective 28 June 2017.

Mr. Muneer Nawaz has been re-appointed as the Chairman of the Board of Directors and Mr. Humayun A. Shahnawaz

has also been re-appointed as the Chief Executive Officer of the Company for the next term of three years in the Board of Directors’ meeting held on 05 July 2017.

A statement under section 134(3) of the Companies Act, 2017 regarding payment of remuneration of the Chief Executive and full time working Director as approved by the Board and shareholders has already been circulated to all the shareholders of the Company.

The Chief Executive and Executive Director being the Directors of the company are interested in this matter to the extent of the remuneration payable to them.

EXTERNAL AUDITORS

Messrs. EY Ford Rhodes, Chartered Accountants have completed their assignment for the year 2016-17 and will retire at the conclusion of the 54th Annual General Meeting. Being eligible, they have offered themselves for re-appointment. The Board of Directors, on recommendations of the Audit Committee, proposes the appointment of Messrs. EY Ford Rhodes, Chartered Accountants, for the year ending 30 June 2018.

STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES ON TRANSFER PRICING

The Company has fully complied with the best practices on transfer pricing as contained in the listing regulations of the stock exchanges.

CORPORATE SOCIAL RESPONSIBILITIES

Disclosure as required by the Corporate Social Responsibility General Order, 2009 is annexed and form integral part of this report.

ACKNOWLEDGEMENT

We, for and on behalf of Directors, would like to take this opportunity to express appreciation of the commitment, loyalty and dedication of our workforce.

Further we would like to acknowledge the professional support and cooperation received from our esteemed customers, vendors, bankers, equity holders and other stakeholders.

For and on behalf of the Board

Muneer Nawaz Humayun A. ShahnawazChairman Chief Executive

Karachi26 September 2017.


EMPLOYMENT OF SPECIAL PERSONS

To ensure the welfare and rehabilitation of special persons, the Company has especially stressed upon the induction of Disabled Persons in accordance with “Employment and Rehabilitation Ordinance, 1981”. The Company has established a policy regarding the hiring of disable persons with assigning a special quota in compliance with the said ordinance to ensure the protection of deserving persons.

OCCUPATIONAL SAFETY, HEALTH, ENVIRONMENTAL PROTECTION AND ENERGY CONSERVATIONS

Safety and Health protection of our employees as well as protection of environment are the Principal concerns of the Company. We firmly believe that commitment to safety health and environmental protection (SHE) is an indispensable part of our main objective of efficiently producing and distributing quality products. Matters of SHE are integral parts of the business planning processes and decision making. They are handled with the same sense of responsibility and just as other operations like quality, productivity and cost-efficiency.We ensure all technical, organizational and personnel measures for the prevention of potentially hazardous situations and to manage incidents or accidents.

We strive to achieve eco-efficiency by optimizing resource utilization, conserve energy and avoid damage to environment, employees and public.

CORPORATE PHILANTHROPY

Shezan management is well aware of the fact that corporate philanthropy is a social responsibility, which is performed by donating to various organizations and associations.

NATIONAL-CAUSE DONATION

The Company is committed towards helping distressed communities as and when required. For this purpose, the Company has made donations to various educational and charitable organizations including Marie Adelaide Leprosy Center, Care Foundation, SOS, Children Village, Chhipa Welfare Association, Shaukat Khanum Memorial Cancer Hospital, LRBT, Edhi Foundation, Fatimid Foundation, WWF Pakistan, Lady Wallington Hospital, Pakistan Association of the Blind, Cancer Care Hospital, Children Hospital, Ansar Burney Trust Hospital, Lahore General Hospital, Aziz Jehan Begum Trust of Blind and Jinnah Hospital.

The Company believes that Corporate Social Responsibility is the continuing commitment to behave ethically and contribute to economic development of the workforce and their families as well as of the local community and society at large.

BUSINESS ETHICS AND ANTI-CORRUPTION MEASURES

Business Ethics which include the practice of honesty and integrity are considered as an essential part in everyday operations of the Company. Since the Company’s business is to deal with food and juice products, so it is the policy of the Company to provide not only healthy products to its customers but also ensures clear and coherent view of its product range in all its advertisement campaigns.

Further, Statement of Ethics and Business Practices is circulated among all employees of the Company for compliance purposes. It proved very helpful in maintaining the level of compliance of each employee towards organizational philosophy.

Along with all these, the Company has developed procedure and system regarding all key positions to guard against corruption.

INDUSTRIAL RELATIONS

Cordial industrial relations and harmonious working environment prevailed at all locations of the Company. The management enjoys good relationship with the employees. CBA elections are held in time and without any hurdles. The basic purpose of this practice is to secure maximum cordiality between the workers and the management and to establish a climate of mutual understanding where-by the workers are able to contribute their best for the growth and development of the Company. The Company has a Hajj Scheme and two workers were sent to perform Hajj at the Company’s expense. The Company also has good relations with the suppliers.

CORPORATE SOCIAL RESPONSIBILITY


COMMUNITY INVESTMENT AND WELFARE SPENDING FOR UNDER-PRIVILEGED CLASSES

The Company has complete focus on the welfare of community as its mandatory role. Since the incorporation of Company in 1964, it has contributed to its maximum in different welfare schemes of the society. Along with all these investments, our management also devoted some area for the community mosque along with the provision of reasonable funds for the construction of said mosque.

CONSUMER PROTECTION MEASURES

Since the product line of Shezan International Limited mainly consists of Foods & Beverages which are considered among the category of FMCG (Fast Moving Consumer Goods) products, therefore, its key focus is on the healthy products. For this purposes, our Research and Development department is very much active in regular testing of our product range for their quality conformance. Further, the management is very keen regarding the implementation and execution of ISO rules and regulation for the quality maintenance.

ENVIRONMENTAL PROTECTION MEASURES

The environmental protection is significantly focused by the management of the Company in its policies to protect the environment from any hazards. The management has planted many plants and trees inside the factory area which shows their complete realization of healthy and pollution-free environment.

CONTRIBUTION TO NATIONAL EXCHEQUER

Our Company is a responsible corporate entity and we strongly believe that it is our duty to pay due taxes with all integrity and national fervor. Our Company contributed Rs. 1.575 billion towards national exchequer in the shape of taxes, duties and levies etc. during the year.

Description (Rupees in thousand)

Income Tax 64,147

Sales Tax and Excise Duty 1,510,860

Total 1,575,007


1. Incorporation Number: 00018832. Name of Company: Shezan International Limited.3. Pattern of holding of the shares held by the shareholders as at 30-06-2017. 4. Shareholding

No. of Shareholders From To Total Shares Held

243 1 100 7,162 166 101 500 42,868 89 501 1,000 70,488 75 1,001 5,000 170,230 10 5,001 10,000 73,203 4 10,001 15,000 48,177 4 15,001 20,000 65,536 2 20,001 25,000 43,027 1 30,001 35,000 33,123 3 35,001 40,000 108,600 2 40,001 45,000 87,179 1 45,001 50,000 48,995 1 65,001 70,000 68,997 1 70,001 75,000 72,350 1 75,001 80,000 79,662 2 100,001 105,000 203,409 1 105,001 110,000 107,600 1 110,001 115,000 114,469 1 130,001 135,000 130,732 1 135,001 140,000 138,232 3 140,001 145,000 424,977 3 145,001 150,000 437,991 1 160,001 165,000 162,650 1 180,001 185,000 182,317 1 185,001 190,000 188,990 1 260,001 265,000 263,628 2 330,001 335,000 669,998 1 345,001 350,000 347,390 1 595,001 600,000 599,327 1 740,001 745,000 742,338 1 755,001 760,000 757,100 1 1,495,001 1,500,000 1,495,255 626 7,986,000

PATTERN OF SHAREHOLDINGS AS AT 30 JUNE 2017

5. Categories of Shareholders Shares held Percentage

5.1 Directors, Chief Executive Officer, their Spouses and Minor Children 2,517,890 31.5288%5.2 Associated Companies, Undertakings and Related Parties 3,493 0.0437%5.3 NIT and ICP - -5.4 Banks, Development Financial Institutions, Non Banking Financial Institutions 851 0.0107%5.5 Insurance Companies 195,188 2.4441%5.6 Modarabas and Mutual Funds 162,600 2.0361%5.7 Shareholders holding 10% or more of Total Capital 1,495,255 18.7235%5.8 General Public a. Local 3,094,245 38.7459% b. Foreign - -5.9 Others 5,249 0.0657%5.9.1 Joint Stock Companies 2,921 0.0366%5.9.2 Pension Funds 155,032 1.9413%5.9.3 Foreign Companies 347,390 4.3500%5.9.4 Government Holding 5,374 0.0673%5.9.5 Executives 512 0.0064%

Total 7,986,000 100.00%

Shareholders Holding 5% or More of Total Capital 3,627,143 45.4188%


CATEGORIES OF SHARE HOLDERSAS AT 30 JUNE 2017

Sr. No. Name Shares Held Percentage

5.1 Directors, Chief Executive Officer, their Spouses & Minor Children

1 Mr. Mahmood Nawaz 742,338 9.2955% Mr. Mahmood Nawaz (CDC) 33,123 0.4148%2 Mr. Muneer Nawaz 599,327 7.5047%3 Mr. M. Naeem 48,995 0.6135%4 Mr. Rashed Amjad Khalid 145,891 1.8268% Mr. Rashed Amjad Khalid 158 0.0020%5 Mr. Humayun A. Shahnawaz 334,999 4.1948%6 Mrs. Manahil Shahnawaz 162,650 2.0367%7 Mr. Saifi Chaudhry (CDC) 700 0.0088%8 Mr. Syed Etrat Hussain Rizvi (NIT Nominee) - -9 Mrs. Abida Muneer Nawaz W/o Mr. Muneer Nawaz 79,662 0.9975%10 Mrs. Bushra Mahmood Nawaz W/o Mr. Mahmood Nawaz 5,723 0.0717%11 Mrs. Amtul Bari Naeem W/o Mr. M. Naeem 263,628 3.3011% Mrs. Bari Naeem W/o Mr. M. Naeem 100,696 1.2609%

2,517,890 31.5288% 5.2 Associated Companies, Undertakings and Related Parties

Shezan Services (Private) Limited (CDC) 3,493 0.0437%

5.3 NIT & ICP - -

5.4 Banks, Developments Financial Institutions, Non Banking Financial Institutions

National Bank of Pakistan (CDC) 851 0.0107%

5.5 Insurance Companies

1 EFU Life Assurance Limited (CDC) 107,600 1.3474%2 Habib Insurance Company Limited (CDC) 1,193 0.0149%3 Habib Insurance Company Limited (CDC) 398 0.0050%4 State Life Insurance Corporation of Pakistan (CDC) 68,997 0.8640%5 United Insurance Company of Pakistan Limited (CDC) 10,100 0.1265%6 Dawood Family Takaful Limited (CDC) 2,900 0.0363%7 Dawood Family Takaful Limited (CDC) 4,000 0.0501%

195,188 2.4441% 5.6 Modaraba & Mutual Funds

1 Trustee MCB Pakistan Asset Allocation Fund (CDC) 4,650 0.0582%2 Trustee NIT Islamic Equity Fund (CDC) 72,350 0.9060%3 Trustee NIT-Equity Market Opportunity Fund (CDC) 10,700 0.1340%4 Trustee Pakistan Capital Market Fund (CDC) 2,600 0.0326%5 Trustee UBL Retirement Savings Fund - Equity Sub Fund (CDC) 37,000 0.4633%6 Trustee Al-Ameen Islamic Retirement Saving Fund- Equity Sub Fund (CDC) 35,300 0.4420%

162,600 2.0361% 5.7 Shareholders Holding 10% or more of Total Capital

Trustee National Investment (Unit) Trust (CDC) 1,495,255 18.7235%


Sr. No. Name Shares Held Percentage

5.8 General Public

a. Local 3,094,245 38.7459% b. Foreign - -

3,094,245 38.7459%

5.9 Others

1 Trustee National Bank of Pakistan Employee Benevolent Fund Trust (CDC) 4,849 0.0607%2 Descon Chemicals Limited Gratuity Fund (CDC) 50 0.0006%3 Descon Oxychem Limited Employees Provident Fund (CDC) 100 0.0013%4 Trustee Inspectest (Private) Limited Employees Provident Fund Trust (CDC) 50 0.0006%5 Trustee Descon Power Solutions (Private) Limited Employee Provident Fund Trust (CDC) 200 0.0025%

5,249 0.0657% 5.9.1 Joint Stock Companies

1 Murree Brewery Company Limited 158 0.0020%2 Burma Oil Mills Limited (CDC) 665 0.0083%3 Ismail Abdul Shakoor Securities (Private) Limited (CDC) 264 0.0033%4 ISPI Corporation (Private) Limited (CDC) 1,700 0.0213%5 Magnus Investment Advisors Limited (CDC) 132 0.0017%6 NH Capital Fund Limited (CDC) 2 0.0000%

2,921 0.0366% 5.9.2 Pension Funds

1 Trustee National Bank of Pakistan Employees Pension Fund (CDC) 138,232 1.7309%2 Trustee Pakistan Pension Fund - Equity Sub Fund (CDC) 16,800 0.2104%

155,032 1.9413% 5.9.3 Foreign Companies

Tundra Pakistan Fund (CDC) 347,390 4.3500%

5.9.4 Government Holding

Federal Board of Revenue (CDC) 5,374 0.0673%

5.9.5 Executives

Mr. Waseem Amjad Mahmood (CDC) 512 0.0064%

7,986,000 100.00% Shareholders Holding 5% or more of Total Capital

1 Trustee National Investment (Unit) Trust (CDC) 1,495,255 18.7235%2 Mr. Mahmood Nawaz 775,461 9.7103%3 Ms. Amina Wadawala (CDC) 757,100 9.4803%4 Mr. Muneer Nawaz 599,327 7.5047%

3,627,143 45.4188% During the financial year there was no trading in shares of the Company by the Directors, CEO, CFO, Company Secretary, their spouses and minor children.

CATEGORIES OF SHARE HOLDERSAS AT 30 JUNE 2017


SIX YEARS REVIEW AT A GLANCE

2012 2013 2014 2015 2016 2017

NET SALESRupees in thousand

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

5,06

0,89

8

5,67

4,50

0

6,76

0,52

7

6,81

7,63

5

6,81

6,54

0

7,15

9,01

5 Year Year Year Year Year Year 2012 2013 2014 2015 2016 2017

Rupees in thousand Income

Sales 5,060,898 5,674,500 6,760,527 6,817,635 6,816,540 7,159,015 Other operating income 37,675 37,257 53,592 59,796 51,859 38,321

5,098,573 5,711,757 6,814,119 6,877,431 6,868,399 7,197,336 Expenditure

Cost of sales 3,603,285 3,963,874 4,735,740 4,877,580 4,931,776 5,083,750 Distribution cost and administrative expenses 991,362 1,168,082 1,487,088 1,463,397 1,494,151 1,508,915 Finance cost 53,118 45,756 28,571 60,967 52,178 36,419 Other operating expenses 132,738 139,724 162,188 161,177 186,818 206,309

4,780,503 5,317,436 6,413,587 6,563,121 6,664,923 6,835,393

Profit before taxation 318,070 394,321 400,532 314,310 203,476 361,943 Taxation 110,700 145,000 141,000 19,332 9,190 102,625

Profit after Taxation 207,370 249,321 259,532 294,978 194,286 259,318 Paid-up capital 60,000 66,000 72,600 79,860 79,860 79,860 Reserves & unappropriated profits 1,055,381 1,244,781 1,431,970 1,647,774 1,754,742 1,942,089 Unrealized gain / (loss) on remeasurement 79 257 686 528 (237) 756 of investments available for sale

Share holders equity 1,115,460 1,311,038 1,505,256 1,728,162 1,834,365 2,022,705 Breakup value per share in Rupees 185.91 198.64 207.34 216.40 229.70 253.28 Earnings per share in Rupees 31.42 34.34* 32.50* 36.94 24.33 32.47 Price Earnings Ratio 6.24 19.13 27.69 24.72 18.56 14.63 Dividend declared per share in Rupees 9.00 10.00 10.00 11.00 9.00 13.50 Bonus per share 10% 10% 10% – – –

* Figures have been restated.

PROFIT AFTER TAXATIONRupees in thousand

-

40,000

80,000

120,000

160,000

200,000

240,000

280,000

320,000

207,

370

249,

321

259,

532

294,

978

194,

286

259,

318

2012 2013 2014 2015 2016 2017


We have reviewed the enclosed Statement of Compliance with the best practices (the Statement) contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of Shezan International Limited (the Company) for the year ended 30 June, 2017 to comply with the requirements of, Rule Book of Pakistan Stock Exchange Limited Chapter 5, Clause 5.19.24(b) of the Code of Corporate Governance, where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement reflects the status of the Company’s compliance with the provisions of the Code and report if it does not. A review is limited primarily to inquiries of the Company’s personnel and review of various documents prepared by the Company to comply with the Code.

As part of our audit of financial statements, we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board’s statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Company’s corporate governance procedures and risks.

The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm’s length transactions and transactions which are not executed at arm’s length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of approval of related party transactions by the Board of Directors upon recommendation of Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm’s length price or not.

Based on our review, nothing has come to our attention, which causes us to believe that the Statement does not appropriately reflect the status of the Company’s compliance, in all material respects, with the best practices contained in the Code, for the year ended 30 June 2017.

Chartered AccountantsLahore: Engagement Partner29 September 2017. Abdullah Fahad Masood

REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE

22

This statement is being presented to comply with the Code of Corporate Governance (the “Code”) contained in Regulation No. 5.19.23 of Listing Regulations of Pakistan Stock Exchange for the purpose of establishing a framework of good governance, whereby a listed Company is managed in compliance with the best practices of corporate governance.

The Company has applied the principles contained in the CCG in the following manner:

1. The Company encourages representation of independent non-executive Directors and Directors representing minority interests on its Board of Directors. At present the Board includes:

Category Names

Independent Director Mr. Munaf Ibrahim*

Mr. Saifi Chaudhry**

Executive Directors Mr. Mahmood Nawaz

Mr. Humayun A. Shahnawaz

Non-Executive Directors Mr. Muneer Nawaz

Mr. M. Naeem

Mr. Rashed Amjad Khalid

Ms. Manahil Shahnawaz

Mr. Syed Etrat Hussain Rizvi

The independent Director meets the criteria of independence under clause 5.19.1. (b) of the CCG.

2. The Directors have confirmed that none of them is serving as a Director on more than seven listed companies, including this Company.

3. All the resident Directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking Company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange.

4. A casual vacancy occurring on the board on 28 July 2016 was filled up by the Directors within 90 days.

5. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps have been taken to disseminate it throughout the Company along with its supporting policies and procedures.

6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO, other executive and non-executive Directors, have been taken by the Board/shareholders.

8. The meetings of the Board were presided over by the Chairman and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

9. The Directors are conversant with the relevant laws applicable to the Company, its policies and procedures and provisions of memorandum and articles of association and are aware of their

duties and responsibilities. Three Directors of the Company have minimum 14 years of education and 15 years of experience on the Board of a listed company and therefore are exempted from Director’s training program. Three Directors are certified by the Pakistan Institute of Corporate Governance (PICG). The Company however intends to facilitate further training for the remaining director in near future as defined in the Code of Corporate Governance.

10. The Board has approved the appointment of the Head of Internal Audit during the year, including his remuneration and terms and condition of employment.

11. The Directors’ report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salient matters required to be disclosed.

12 The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.

13. The Directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholdings.

14. The Company has complied with all the corporate and financial reporting requirements of the CCG.

15. The Board has formed an Audit Committee which comprises three members, all of whom are non-executive Directors. None of these members was an independent Director. The Board has now appointed Mr. Saifi Chaudhry as an independent Director to the Audit Committee, in its meeting held on 28 September 2016.

16. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by the CCG. The terms of reference of the Committee have been formed and advised to the Committee for compliance.

17. The Board has formed a Human Resource and Remuneration Committee. It comprises three members, of whom two are non-executive Directors and the Chairman of the committee is a non-executive Director.

18. The Board has set up an effective internal audit function with suitably qualified and experienced staff conversant with the policies and procedures of the Company.

19. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.

20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.

21 The ‘closed period’, prior to the announcement of interim/final results, and business decisions, which may materially affect the market price of Company’s securities, was determined and intimated to Directors, employees and stock exchange.

22. Material/price sensitive information has been disseminated among all market participants at once through stock exchange.

23. We confirm that all other material principles enshrined in the CCG have been complied with.

Karachi: Humayun A. Shahnawaz26 September 2017. Chief Executive

STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE FOR THE YEAR ENDED 30 JUNE 2017

* Mr. Munaf Ibrahim has resigned from Board with effect from 28 July 2016.

** Mr. Saifi Chaudhry was appointed to the Board with effect from 28 September 2016.

23ANNUAL REPORT 2017

We have audited the annexed balance sheet of Shezan International Limited (the Company) as at 30 June 2017 and the related statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Company’s management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

(a) in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984;

(b) in our opinion;

i. the balance sheet and statement of comprehensive income together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied except for changes as stated in note 2.3 of these financial statements, with which we concur;

ii. the expenditure incurred during the year was for the purpose of the Company's business; and

iii. the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Company.

(c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at 30 June, 2017 and of the comprehensive income, its cash flows and changes in equity for the year then ended; and

(d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the

Company and deposited in the central Zakat fund established under section 7 of the Ordinance.

Chartered AccountantsLahore: Engagement Partner29 September 2017. Abdullah Fahad Masood

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS


Rupees in thousand Note 2017 2016

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 5 1,175,946 1,187,011 Long-term investment 6 2,877 2,121 Long-term deposits 7 5,183 4,253

1,184,006 1,193,385 CURRENT ASSETS

Stores and spares 8 71,178 66,718 Stock-in-trade 9 1,358,515 1,238,081 Trade debts 10 259,853 269,494 Loans and advances 11 185,138 75,312 Trade deposits and short-term prepayments 12 19,920 15,131 Interest accrued 13 338 268 Income tax recoverable 371,221 306,463 Cash and bank balances 14 73,227 102,906

2,339,390 2,074,373

TOTAL ASSETS 3,523,396 3,267,758

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Share capital 15 79,860 79,860 Reserves 16 1,605,502 1,454,606 Unappropriated profits 337,343 299,899 TOTAL EQUITY 2,022,705 1,834,365

NON-CURRENT LIABILITIES

Long-term loan 17 – 90,000 Deferred taxation 18 62,038 69,374

62,038 159,374 CURRENT LIABILITIES

Trade and other payables 19 680,750 668,625 Interest accrued on borrowings 1,584 1,454 Current portion of long-term loan 17 90,000 120,000 Short-term borrowings 20 292,525 226,277 Provision for taxation 373,794 257,663

1,438,653 1,274,019

TOTAL LIABILITIES 1,500,691 1,433,393

CONTINGENCIES AND COMMITMENTS 21

TOTAL EQUITY AND LIABILITIES 3,523,396 3,267,758

The annexed notes from 1 to 40 form an integral part of these financial statements.

BALANCE SHEET AS AT 30 JUNE 2017

Chief Financial OfficerChief Executive Director



Sales - net 22 7,159,015 6,816,540

Cost of sales 23 5,083,750 4,931,776

Gross profit 2,075,265 1,884,764

Distribution costs 24 1,230,186 1,249,860

Administrative expenses 25 278,729 244,291

Other operating expenses 26 206,309 186,818

Other income 27 (38,321) (51,859)

1,676,903 1,629,110

Operating profit 398,362 255,654

Finance costs 28 36,419 52,178

Profit before taxation 361,943 203,476

Taxation 29 102,625 9,190

Net profit for the year 259,318 194,286

Other comprehensive income

Other comprehensive income to be reclassified to profit

or loss in subsequent periods (net of tax):

Unrealized gain / (loss) on remeasurement of investment - available for sale 756 (237)

Total comprehensive income 260,074 194,049

Earnings per share - basic and diluted (Rupees) 30 32.47 24.33 The annexed notes from 1 to 40 form an integral part of these financial statements.

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017




CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations

Profit before taxation 361,943 203,476

Adjustments to reconcile profit before tax to net cash: Depreciation 218,376 211,394 Interest / markup expense 33,390 49,323 Profit on bank deposits (1,968) (1,940) Foreign exchange loss 341 1,727 Impairment of plant and machinery – 2,000 Provision for doubtful debts 1,188 – Loss on disposal of property, plant and equipment 13,173 7,067

264,500 269,571

Operating profit before working capital changes 626,443 473,047

(Increase) / decrease in current assets

Stores and spares (4,460) (8,751)Stock-in-trade (120,434) 215,425 Trade debts 7,987 34,549 Loans and advances (109,826) (48,250)Trade deposits and short-term prepayments (4,789) 667

(231,522) 193,640 (Decrease) / increase in current liabilities

Trade and other payables 17,597 (110,746)Short-term borrowings - secured 66,248 (53,723)

83,845 (164,469)

CASH GENERATED FROM OPERATIONS 478,766 502,218

Interest expense paid (33,260) (58,546)Profit on bank deposits received 1,898 1,964 Income tax paid (64,147) (99,786)Long-term deposits paid (930) (692)

NET CASH GENERATED FROM OPERATING ACTIVITIES 382,327 345,158

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (249,191) (221,441)Sale proceeds from disposal of property, plant and equipment 28,707 13,303

NET CASH USED IN INVESTING ACTIVITIES (220,484) (208,138)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of long-term loan (120,000) (90,000)Dividend paid (71,522) (87,369)

NET CASH USED IN FINANCING ACTIVITIES (191,522) (177,369)

NET DECREASE IN CASH AND CASH EQUIVALENTS (29,679) (40,349)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 102,906 143,255

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 14 73,227 102,906


CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2017



Capital Reserve Revenue Reserve

Un realized gain/(loss) on remeasurement Share Merger General of investments Unappropriated Capital reserve reserve available for sale profits Total

Rupees in thousand

Balance as at 30 June 2015 79,860 5,000 1,250,000 (157) 393,459 1,728,162

Transfer to general reserve – – 200,000 – (200,000) –

Final dividend @ Rs. 11/- per share for

the year ended 30 June 2015 – – – – (87,846) (87,846)

Profit for the year – – – – 194,286 194,286

Other comprehensive income – – – (237) – (237)

Total comprehensive income – – – (237) 194,286 194,049

Balance as at 30 June 2016 79,860 5,000 1,450,000 (394) 299,899 1,834,365

Transfer to general reserve – – 150,000 – (150,000) –

Final dividend @ Rs. 9/- per share for

the year ended 30 June 2016 – – – – (71,874) (71,874)

Profit for the year – – – – 259,318 259,318

Other comprehensive income – – – 756 – 756

Total comprehensive income – – – 756 259,318 260,074

Deferred tax adjustment on unrealized gain – – – 140 – 140

Balance as at 30 June 2017 79,860 5,000 1,600,000 502 337,343 2,022,705


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017



1 THE COMPANY AND ITS OPERATIONS

The Company is a Public Limited Company incorporated in Pakistan and is listed on the Pakistan Stock Exchange. The registered office of the Company is situated at 56 - Bund Road, Lahore, Pakistan. It is engaged in the manufacturing, trading and sale of juices, pickles, jams, ketchups etc, based upon or derived from fruits and vegetables.

2 STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984,(repealed, see below) provisions of and directives issued under the Companies Ordinance, 1984. Wherever, the requirement of the Companies Ordinance, 1984 or directive issued by the Securities and Exchange Commission of Pakistan (SECP) differ with the requirements of these standards, the requirements of Companies Ordinance, 1984 or the requirements of the said directives take precedence.

The Securities and Exchange Commission of Pakistan, via its Circular No. 17 of 2017, dated 20 July 2017 read with the related Press Release, has instructed companies to prepare financial statements, for the year ended 30 June 2017, in accordance with the provisions of the repealed Companies Ordinance, 1984. The Company will prepare its annual financial statements for the year ending 30 June 2018 in accordance with the provisions of the Companies Act, 2017.

2.1 Basis of Measurement

These financial statements have been prepared under historical cost convention, except for investments classified as ‘available-for-sale’ which are stated at fair value.

2.2 Presentation Currency

These financial statements are presented in Pak Rupees, which is the Company’s functional currency. Figures have been rounded off to the nearest thousands of Rupees, unless otherwise stated.

2.3 Standards, interpretations and amendments applicable to the financial statements for the year ended 30 June 2017

The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous financial year except as described below:

New Standards and Amendments

The Company has adopted the following accounting standard and the amendments which became effective for the current year:

IFRS 10 Consolidated Financial Statements – Investment Entities: Applying the Consolidated Exception (Amendment)

IFRS 12 Disclosure of Interest in Other Entities – Investment Entities: Applying the Consolidated Exception (Amendment)

IFRS 11 Joint Arrangements Accounting for Acquisition of Interest in Joint Operation (Amendment)

IAS 1 Presentation of Financial Statements - Disclosure Initiative (Amendment)

IAS 16 & 38 Property, Plant and Equipment and Intangible Assets - Clarification of Acceptable Method of Depreciation (Amendment)

IAS 16 & 41 Property, Plant and Equipment and Agriculture – Agriculture: Bearer Plants (Amendment)

IAS 27 Separate Financial Statements - Equity Method in Separate Financial Statements (Amendment)

Improvements to Accounting Standards Issued by the IASB in September 2014

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - Changes in methods of disposal

IFRS 7 Financial Instruments: Disclosures - Servicing contracts

IFRS 7 Financial Instruments: Disclosures - Applicability of the offsetting disclosures to condensed interim financial statements

IAS 19 Employee Benefits - Discount rate: regional market issue

IAS 34 Interim Financial Reporting - Disclosure of information ‘elsewhere in the interim financial report’

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017


The adoption of the above accounting standards did not have any material effect on the financial statements.

Standards, Interpretations and amendments to approved accounting standards that are not yet effective:

The following standards, amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standard or interpretation:

Effective date Standard or Interpretation (annual periods beginning on or after)

IFRS 2 Share-based Payments – Classification and Measurement of 01 January 2018

Share-based Payments Transactions (Amendments) Not yet finalized

IFRS 10 Consolidated Financial Statements

IAS 28 Investment in Associates and Joint Ventures - Sale or Contribution of Not yet finalized

Assets between an Investor and its Associate or Joint Venture (Amendment) 01 January 2017

IAS 7 Financial Instruments: Disclosures - Disclosure Initiative - (Amendment)

IAS 12 Income Taxes – Recognition of Deferred Tax Assets for Unrealized losses 01 January 2017

(Amendments)

IFRS 4 Insurance Contracts: Applying IFRS 9 Financial Instruments with 01 January 2018

IFRS 4 Insurance Contracts – (Amendments)

IAS 40 Investment Property: Transfers of Investment Property (Amendments) 01 January 2018

IFRIC 22 Foreign Currency Transactions and Advance Consideration 01 January 2018

IFRIC 23 Uncertainty over Income Tax Treatments 01 January 2019

The above standards and amendments are not expected to have any material impact on the Company’s financial statements in the period of initial application.

In addition to the above standards and amendments, improvements to various accounting standards have also been issued by the IASB in December 2016. Such improvements are generally effective for accounting periods beginning on or after 01 January 2018. The Company expects that such improvements to the standards will not have any impact on the Company’s financial statements in the period of initial application.

Further, following new standards have been issued by IASB which are yet to be notified by the SECP for the purpose of applicability in Pakistan.

IASB Effective date Standard or Interpretation (annual periods beginning on or after)

IFRS 9 Financial Instruments: Classification and Measurement 01 January 2018

IFRS 14 Regulatory Deferral Accounts 01 January 2016

IFRS 15 Revenue from Contracts with Customers 01 January 2018

IFRS 16 Leases 01 January 2019

IFRS 17 Insurance Contracts 01 January 2021

The Company is in process of determining impact of IFRS 15 and IFRS 16. The Company does not expect any material impact of the application of other standards.

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances. These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting


estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to, the financial statements, are as follows:

3.1 Provision for taxation

In making the estimate for income tax payable by the Company, the Company takes into account the applicable tax laws and the decisions by appellate authorities on certain issues in the past along-with the risk profile of ongoing litigation and industry related factors.

3.2 Provision for doubtful receivables

The Company reviews it's doubtful trade debts at each reporting date to assess whether provision should be recorded in the profit and loss account. In particular, judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of provision required. Such estimates are based on past history of customers, market intelligence, credit ratings, prevalent financial conditions and operating circumstances of the customers.

3.3 Useful life and residual values of property, plant and equipment

The Company reviews appropriateness of the rate of depreciation, useful lives and residual values used in the calculation of depreciation. In making these estimates, the Company uses the technical resources available with the Company and its history in relation to actual useful lives and residual values of similar assets disposed in the past. Any change in the estimates in the future might affect the carrying amount of the respective item of property, plant and equipment, with a corresponding effect on the depreciation charge and impairment.

3.4 Impairment of financial assets

The Company assesses whether there is objective evidence that a financial asset is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset, has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. Evidence of impairment may include indications that the debtors or group of debtors is experiencing significant financial difficulties, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization, and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

3.5 Stock-in-trade

Provision is recognized in the financial statements for obsolete and slow moving stock-in-trade based on the management’s assessment of age and expected movement of inventory on an item-wise basis.

3.6 Impairment of non-financial assets

The Company assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Non-financial assets are also tested for impairment when there are indicators that the carrying amounts may not be recoverable. For assets which can generally be sold in the market, the prevailing market price is used as an indicator of current recoverable amount. Technical analysis and market data is used to arrive at the recoverable amount for specialized assets.

3.7 Provision for compensated absences

The Company accounts for compensated absences on the basis of the un-availed earned leave balance of each employee at the end of the year.

Other areas requiring estimates and judgments are disclosed in respective notes to the financial statements.

4 SIGNIFICANT ACCOUNTING POLICIES

4.1 The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous financial year except as mentioned in note 2.3.



4.2 Property, plant and equipment

Owned assets

Property, plant and equipment except for freehold land and leasehold land held on 99 years lease, are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Free hold and lease hold land are stated at cost.

Depreciation is calculated using the reducing balance method at rates disclosed in note 5, which are considered appropriate to write off the cost of the assets over their useful lives.

Depreciation on additions is charged from the month in which an asset is available for use while no depreciation is charged for the month in which the asset is disposed off.

The carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment is recognized in the income currently. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. Where an impairment loss is recognized, the depreciation charge is adjusted for the future periods to allocate the asset’s revised carrying amount over its estimated useful life.

Subsequent costs are included in the asset’s carrying amount or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to income during the period in which they are incurred.

The gain or loss on disposal or retirement of an asset represents the difference between the sale proceeds and the carrying amount of the asset and is recognized as an income or expense in the period it relates.

Capital work-in-progress

This is stated at cost including capitalization of borrowing costs. It consists of expenditures incurred and advances made, in respect of fixed assets, in the course of their construction and installation.

4.3 Investments

Available-for-sale

Available-for-sale investments, after initial recognition, are measured at fair value with gains or losses being recognized as a separate component of equity until the investment is derecognized or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the profit and loss account.

The fair value of investments, which are actively traded in organized financial markets, is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument, which is substantially the same; discounted cash flow analysis and option pricing models.

4.4 Stores, spares and stock-in-trade

Stocks, stores and spares are valued at lower of cost or net realizable value except those in transit, which are valued at invoice values including other charges, if any, incurred thereon. The basis of determining cost is as follows:

Raw materials – Monthly averagePacking material – Monthly averageFinished goods – Quarterly averagePulps, concentrates etc. – Manufacturing cost according to annual average methodStores and spares – Monthly averageStock-in-transit – Cost

Net realizable value is determined on the basis of estimated selling price of the product in the ordinary course of business, less costs of completion and costs necessary to be incurred for its sale.


4.5 Trade debts

Trade debts are carried at invoice amounts on the transaction date, less any estimate for doubtful receivables. Known bad debts are written off as and when identified.

4.6 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cheques in hand, cash at bank in current, savings and deposit accounts, and other short-term highly liquid instruments that are readily convertible into known amounts of cash, and which are subject to an insignificant risk of changes in value.

4.7 Trade and other Payables

Liabilities for trade and other amounts payable are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company.

4.8 Financial instruments

All the financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of the instruments. The Company derecognizes a financial asset or a portion of a financial asset, when and only when, the enterprise loses control of the contractual rights that comprise the financial asset or portion of financial asset. While a financial liability or part of a financial liability is derecognized from the balance sheet, when and only when, it is extinguished, i.e., when the obligation specified in the contract is discharged, cancelled or expires.

Financial assets of the Company consist of available-for-sale investments and loans and advances. Loans and advances of the Company include deposits, trade debts, other receivables and cash and bank balances. These are stated at their nominal values as reduced by the appropriate allowances for estimated irrecoverable amounts.

Financial liabilities are classified according to the substance of the contractual arrangements entered into. Significant financial liabilities are the long-term loan, short-term running finance utilized under mark-up arrangements, creditors, accrued and other liabilities. Mark-up/ interest bearing finances are recorded at the gross proceeds received. These all are carried at amortized cost. Other liabilities are stated at their nominal values and no liability is carried at fair value.

4.9 Impairment

The carrying amount of the Company’s assets is reviewed at each balance sheet date to determine whether there is any indication of impairment. If such an indication exists, the recoverable amount of such assets is estimated. An impairment loss is recognized wherever the carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognized in the profit and loss account. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit and loss account.

4.10 Offsetting of financial assets and financial liabilities

A financial asset and financial liability is offset and the net amount is reported in the balance sheet if the Company has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

4.11 Dividend and appropriation to reserves

Dividend and appropriation to reserves are recognized as a liability in the Company’s financial statements in the period in which these are approved.

4.12 Taxation

Current

Provision for current taxation is based on taxable income at the current rate of tax after taking into account applicable tax credits, rebates and exemptions available, if any. The charge for current tax includes adjustments to charges for prior years, if any.



Deferred

Deferred tax is provided in full using the balance sheet liability method on all temporary differences arising at the balance sheet date, between the tax bases of the assets and liabilities and their carrying values. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.

The carrying amounts of all deferred tax assets are reviewed at each balance sheet date, and reduced to the extent it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax assets to be utilized.

The tax rates enacted at the balance sheet date are used to determine deferred tax.

4.13 Revenue recognition

Sale of goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, which generally coincides with the delivery of goods to customers.

Interest income

Return on bank deposits is accrued on a time proportion basis, by reference to the principal outstanding, at the applicable rate of return.

Dividend income

Dividend income is recognized when the Company’s right to receive the payment is established.

4.14 Staff retirement benefits

The Company operates a recognized provident fund scheme (defined contribution plan) for all permanent employees. Equal monthly contributions are made both by the Company and the employees to the fund at the rate of 8.33% (2016: 8.33%).

4.15 Compensated absences

The Company accounts for compensated absences on the basis of the un-availed earned leave balance of each employee at the end of the year.

4.16 Borrowing costs

Borrowing costs directly attributable to acquisition, construction, or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

4.17 Foreign currency transactions

Foreign currency transactions are converted into rupees at the rates prevailing on the date of the transactions. Monetary assets and liabilities in foreign currencies are translated into rupees at the rates of exchange prevailing at the balance sheet date.

Gains or losses arising on translation are recognized in the profit and loss account.

4.18 Provisions

A provision is recognized in the balance sheet when the Company has a legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation.


Rupees in thousand

Note 2017 2016

5 PROPERTY, PLANT AND EQUIPMENT Operating fixed assets 5.1 1,088,971 1,109,611 Capital work in progress 5.2 86,975 77,400

1,175,946 1,187,011

5.1 Operating fixed assets

2017 NET BOOK COST DEPRECIATION VALUE

As at As at Accumulated Charge Accumulated As at 01 July Additions / 30 June as at for as at 30 June Depreciation Note 2016 Transfers Disposals 2017 01 July 2016 Disposals the year 30 June 2017 2017 Rate

Rupees in thousand % OWNED ASSETS

Freehold land 7,091 – – 7,091 – – – – 7,091 –Leasehold land 2,646 – – 2,646 – – – – 2,646 –Buildings on freehold land 89,985 8,822 – 98,807 39,229 – 5,442 44,671 54,136 10 Buildings on leasehold land 36,692 – – 36,692 20,981 – 1,571 22,552 14,140 10 Plant and machinery 954,787 29,375 (4,994) 979,168 412,101 (3,876) 69,976 478,201 500,967 12.5 Furniture and fixtures 22,097 822 – 22,919 10,901 – 1,775 12,676 10,243 15 Motor vehicles 157,172 37,486 (4,815) 189,843 104,165 (3,748) 13,473 113,890 75,953 20 Electric fittings and tools 5,804 109 – 5,913 4,237 – 179 4,416 1,497 10-25 Electric equipment 5.1.1 221,435 43,413 – 264,848 112,767 – 36,678 149,445 115,403 15-33.33 Laboratory equipment 1,791 – – 1,791 974 – 82 1,056 735 10 Forklifts 40,925 2,495 - 43,420 25,556 – 3,407 28,963 14,457 20 Computers and accessories 19,295 1,959 (49) 21,205 15,548 (42) 1,632 17,138 4,067 33.33 Arms and ammunitions 94 – – 94 94 – – 94 – 20 Empty bottles, shells- pallets and barrels 5.1.2 483,817 115,135 (99,184) 499,768 187,467 (59,496) 84,161 212,132 287,636 25

2,043,631 239,616 (109,042) 2,174,205 934,020 (67,162) 218,376 1,085,234 1,088,971 2016 NET BOOK COST DEPRECIATION VALUE

As at As at Accumulated Charge Accumulated As at 01 July Additions / 30 June as at for as at 30 June Depreciation Note 2015 Transfers Disposals 2016 01 July 2015 Disposals the year 30 June 2016 2016 Rate

Rupees in thousand % OWNED ASSETS

Freehold land 7,091 – – 7,091 – – – – 7,091 – Leasehold land 1,802 844 – 2,646 – – – – 2,646 – Buildings on freehold land 68,960 21,025 – 89,985 35,674 – 3,555 39,229 50,756 10 Buildings on leasehold land 36,692 – – 36,692 19,235 – 1,746 20,981 15,711 10 Plant and machinery 902,907 52,380 (500) 954,787 340,324 (196) 71,973 412,101 542,686 12.5 Furniture and fixtures 17,064 5,033 – 22,097 9,740 – 1,161 10,901 11,196 15 Motor vehicles 155,360 6,536 (4,724) 157,172 94,705 (2,884) 12,344 104,165 53,007 20 Electric fittings and tools 5,804 – – 5,804 4,063 – 174 4,237 1,567 10-25 Electric equipment 5.1.1 192,557 28,978 (100) 221,435 83,638 (52) 29,181 112,767 108,668 15-33.33 Laboratory equipment 1,791 – – 1,791 883 – 91 974 817 10 Forklifts 34,659 6,902 (636) 40,925 23,271 (633) 2,918 25,556 15,369 20 Computers and accessories 17,400 1,895 – 19,295 14,239 – 1,309 15,548 3,747 33.33 Arms and ammunitions 94 – – 94 94 – – 94 – 20 Empty bottles, shells- 5.1.2 425,101 108,880 (50,164) 483,817 132,514 (31,989) 86,942 187,467 296,350 25 pallets and barrels

1,867,282 232,473 (56,124) 2,043,631 758,380 (35,754) 211,394 934,020 1,109,611

5.1.1 Visi coolers costing Rs. (thousand) 127,457 (2016: Rs. (thousand) 97,063), are in the possession of shopkeepers for the sale of Company's products.



5.1.2 These include bottles and shells costing Rs. (thousand) 185,937 (2016: Rs. (thousand) 170,560) held by distributors of the Company in the normal course of business.

5.2 CAPITAL WORK IN PROGRESS COST Plant & Land* Furniture Machinery Vehicles Buildings 2017 2016

Rupees in thousand

Balance as at 01 July 70,507 – 2,000 – 4,893 77,400 90,432

Additions during the year – 1,834 4,733 38,749 16,097 61,413 73,869 Transferred to operating fixed assets – (797) (4,733) (37,486) (8,822) (51,838) (68,976) Impairment of plant – – – – – – (2,000) Transferred to loans and advances – – – – – – (15,925)

Balance as at 30 June 70,507 1,037 2,000 1,263 12,168 86,975 77,400

* This represents amount paid to Punjab Industrial Estate (PIE) for the acquisition of land to be utilized for future construction of processing and storage facilities by the Company. The possession and title will be transferred to the Company in due course.

Rupees in thousand

Note 2017 2016

5.3 Depreciation charge for the year has been allocated as follows:

Cost of sales 23.1 123,069 127,310 Distribution costs 24 72,234 65,849 Administrative expenses 25 11,632 10,556 Other operating expenses 26 11,441 7,679

218,376 211,394

6 LONG-TERM INVESTMENT - AVAILABLE FOR SALE

Quoted Modaraba

BRR Guardian Modaraba - Credit rating - A 305,000 (2016: 305,000) certificates of Rs. 10/- each 6.1 2,375 2,375 Gain / (loss) on remeasurement 502 (254)

2,877 2,121 6.1 The above investment represents 0.39% (2016: 0.39%) of the issued certificate capital of the Modaraba. 6.2 These investments are placed under a shariah permissible agreement.

Rupees in thousand

2017 2016

7 LONG-TERM DEPOSITS

Deposits

- Utility companies 2,518 1,802 - Others 2,665 2,451

5,183 4,253


Rupees in thousand

Note 2017 2016

8 STORES AND SPARES

Stores 3,538 4,148 Spares 67,640 62,570

71,178 66,718

9 STOCK-IN-TRADE

Raw materials 89,203 89,508 Packing materials 339,972 359,714 Finished goods 206,392 197,198 Pulps, concentrates etc. 9.1 689,941 568,789 Goods in transit 33,007 22,872

1,358,515 1,238,081

9.1 These include pulps amounting to Rs. (thousand) 243,673 (2016: Rs. (thousand) 158,502), held with third parties in the normal course of business.

Rupees in thousand

Note 2017 2016

10 TRADE DEBTS

Unsecured - considered good Due from related parties 10.1 2 – Others 259,851 269,494

259,853 269,494

Considered doubtful - others 1,374 1,350 Less: Provision for doubtful debts 10.2 1,374 1,350

– –

259,853 269,494

10.1 No amount is receivable from the Chief Executive, Directors and Executives of the Company (2016: Rs. (thousand) Nil).

Rupees in thousand

2017 2016

10.2 Provision for doubtful debts

Balance as at 01 July 1,350 1,350 Less: Utilized against debts written off (1,164) – Charge for the year - Addition 1,374 – - Reversal (186) –

1,188 –

Balance as at 30 June 1,374 1,350



Rupees in thousand

Note 2017 2016

11 LOANS AND ADVANCES

Advances to distributors - Secured, considered good – 3,202 Advances - Unsecured, considered good - Staff 11.1 5,626 5,763 - Suppliers 11.2 179,512 66,347 Advances - Unsecured, considered doubtful - Suppliers – 100 Less: Provision for doubtful advances 11.3 – 100

– –

185,138 75,312

11.1 No advances were given to the Chief Executive, Directors and Executives of the Company (2016: Rs. (thousand) Nil).

11.2 This includes interest free advance amounting to Rs. (thousand) 173,032 (2016: Rs. (thousand) Nil) paid to Shahtaj Sugar Mills Limited for the purchase of raw material.

Rupees in thousand

Note 2017 2016

11.3 Provision for doubtful advances

Balance as at 01 July 100 100 Less: Utilized against debts written off (100) – Charge during the year – –

Balance as at 30 June – 100 12 TRADE DEPOSITS AND SHORT-TERM PREPAYMENTS

Short-term deposits 11,463 10,698 Short-term prepayments: - Rent 6,633 3,243 - Others 1,824 1,190

19,920 15,131 13 INTEREST ACCRUED

Profit receivable on bank deposits 338 268

14 CASH AND BANK BALANCES

Cash in hand 13,333 31,412 Cheques in hand 20,698 18,665 Cash at banks - Current accounts 14.1 17,848 31,503 - PLS savings accounts 14.2 21,348 21,326

73,227 102,906 14.1 This includes two bank accounts, restricted for dividend payments, aggregating to Rs. (thousand) 928 (2016: Rs.

(thousand) 1,550). 14.2 The balances in the PLS savings accounts carry mark-up @ 3.75% (2016: 3.75% to 4.50%) per annum.


15 SHARE CAPITAL

Number of Shares Rupees in thousand

Note 2017 2016 2017 2016

Authorised share capital

Ordinary shares of Rs. 10/- each 10,000,000 10,000,000 100,000 100,000

Issued, subscribed and paid-up share capital

Ordinary shares of Rs. 10/- each

Opening as at 01 July

- Fully paid in cash 237,500 237,500 2,375 2,375 - Issued as fully paid bonus shares 7,748,500 7,748,500 77,485 77,485

7,986,000 7,986,000 79,860 79,860 Issued during the year

- Fully paid bonus shares 15.1 – – – –

Closing as at 30 June

- Fully paid in cash 237,500 237,500 2,375 2,375 - Issued as fully paid bonus shares 7,748,500 7,748,500 77,485 77,485

7,986,000 7,986,000 79,860 79,860 15.1 Non-transfer of bonus shares to individual shareholders

During the year ended 30 June 2015, the Company issued 726,000 bonus shares @ 10% of its then paid-up capital on the book closure date of 23 October 2014. In accordance with the provisions of section 236M of the Income Tax Ordinance, 2001, the Company was required to collect tax from its shareholders @5% on the value of bonus shares, determined on the basis of the end price of the first day of book closure.

However, a number of shareholders of the Company have filed a suit against the Federation of Pakistan, competent authorities and the Company, before the Honorable Sindh High Court, challenging the levy of tax under the above referred section. Since the matter is subjudice before the Honorable Sindh High Court, the Company has retained 5% of the bonus shares issued to plaintiff shareholders.

Rupees in thousand

Note 2017 2016

16 RESERVES

Capital

Merger Reserve 16.1 5,000 5,000

Revenue

General Reserve - At the beginning of the year 1,450,000 1,250,000 - Transferred from unappropriated profits 150,000 200,000

1,600,000 1,450,000 Unrealized gain on remeasurement of investment - available for sale - At the beginning of the year (394) (157) - Additions during the year 896 (237)

502 (394)

1,605,502 1,454,606 16.1 This reserve can be utilized by the Company, only for the purposes specified in section 83(2) of the Companies

Ordinance, 1984 (repealed).



Rupees in thousand

2017 2016

17 LONG-TERM LOAN

Secured Long-term loan 90,000 210,000 Less: Current portion (90,000) (120,000)

– 90,000

This represents long term loan obtained from a commercial bank which originally amounted to Rs. (thousand) 300,000 payable in 10 equal quarterly installments with a grace period of six months. The rate of mark-up / interest is 3 months KIBOR plus 0.30%, payable quarterly. The facility is secured against a first exclusive registered charge on the plant and machinery up to Rs. (thousand) 430,000.

Rupees in thousand

Note 2017 2016

18 DEFERRED TAXATION

This comprises: Deferred tax liabilities on taxable temporary differences

Accelerated tax depreciation 82,494 93,539 Deferred tax assets on deductible temporary differences

Provision for doubtful debts (402) (424) Provision for employee’s compensated absences (9,682) (10,104) Provision for bonuses to staff and agents (10,232) (9,077) Carried forward minimum tax credit – (4,560) Others - deferred tax adjustment on unrealized gain (140) –

(20,456) (24,165)

62,038 69,374

19 TRADE AND OTHER PAYABLES

Due to related parties 19.1 57,511 26,661 Creditors 318,507 295,525 Deposits 19.2 41,964 50,577 Distributors’ credit balances 51,091 64,534 Accrued expenses 118,631 113,983 Sales tax payable 32,447 84,192 Payable to provident fund 1,469 963 Workers’ Profit Participation Fund 19.3 19,472 10,920 Workers’ Welfare Fund 19.4 11,312 7,068 Unclaimed dividend 1,966 1,614 Taxes and other payables 23,199 7,908 Other liabilities 19.5 3,181 4,680

680,750 668,625

19.1 The amounts due to related parties are in the normal course of business and relate to:

Shezan Services (Private) Limited 57,430 26,592 Shahnawaz (Private) Limited 81 69

57,511 26,661



19.2 Agreements with the distributors give the Company the right to utilize these deposits in the normal course of business. The deposits are unsecured and repayable on demand.

Rupees in thousand

Note 2017 2016

19.3 Workers’ Profit Participation Fund

Balance as at 01 July 10,920 16,753 Allocation for the year 26 19,472 10,920

30,392 27,673 Interest on funds utilized in the Company’s business 28 273 177

30,665 27,850 Less: amount paid to the Fund’s Trust 11,193 16,930

Balance at 30 June 19,472 10,920

19.4 Workers’ Welfare Fund

Balance as at 01 July 7,068 4,000 Allocation for the year 26 8,024 4,000

15,092 8,000 Less: amount paid with annual return 3,780 932

Balance at 30 June 11,312 7,068 19.5 This includes Rs. (thousand) Nil (2016: Rs. (thousand) Nil) payable to the Chief Executive Officer and Rs. (thousand)

2,079 (2016: Rs. (thousand) 2,539) payable to various executives.

20 SHORT-TERM BORROWINGS - SECURED

The aggregate short-term borrowings available from commercial banks under mark-up / interest arrangements are Rs. (thousand) 1,625,000 (2016: Rs. (thousand) 1,875,000). The un-utilized portion of the said facility amounts to Rs. (thousand) 1,332,475 (2016: Rs. (thousand) 1,648,723).

The rate of mark-up / interest on short-term borrowings ranges between 1 month KIBOR minus 0.05% to 1 month KIBOR/

3 months KIBOR plus 0.25% (2016: 1 month KIBOR plus 0.02% to 1 month KIBOR/ 3 months KIBOR plus 0.25%), payable monthly/quarterly.

The facilities are secured against a first registered joint pari passu hypothecation and ranking charge on current assets of

the Company up to Rs. (thousand) 2,314,000 (2016: Rs. (thousand) 2,314,000) and Rs. (thousand) 334,000 (2016: Rs. (thousand) 848,000) respectively.

The un-utilized facility for opening letters of credit and for guarantees amounts to Rs. (thousand) 190,430 (2016: Rs.

(thousand) 202,930) and Rs. (thousand) 72,881 (2016: Rs. (thousand) 77,977), respectively.

21 CONTINGENCIES AND COMMITMENTS

21.1 Contingencies

i. Claim of Punjab Employees Social Security Institution (P.E.S.S.I.) for Rs. (thousand) 2,379 (2016: Rs. (thousand) 2,379) is not acknowledged as debt by the Company.

ii. The Company has filed an appeal before the Appellate Tribunal Inland Revenue against the decision of Commissioner

of Inland Revenue (Appeals) for an additional amount of Rs. (thousand) 3,465 (2016: Rs. (thousand) 3,465) in respect of the tax year 2003, which is pending adjudication.


iii. The Commissioner Inland Revenue has filed an appeal pertaining to case of capital gain on merger of wholly owned subsidiary, M/s. Hattar Fruit Products Limited (now merged into the Company) before the Honorable Lahore High Court, against the decision of Appellate Tribunal Inland Revenue for an additional amount of Rs. (thousand) 39,788 (2016: Rs. (thousand) 39,788) in respect of the tax year 2004, which is pending adjudication.

iv. For tax years 2010 and 2012 to 2016, the Company has filed appeals before the Commissioner Inland Revenue

(Appeals) against the orders passed under section 161 of the Income Tax Ordinance, 2001 by the Deputy Commissioner Inland Revenue for payment of additional amount of Rs. (thousand) 5,840 (2016: Rs. (thousand) 4,189), which are pending adjudication.

v. For tax years 2011 and 2013, the Company has filed appeals before the Commissioner Inland Revenue (Appeals)

against the orders passed under section 122(5A) by the Additional Commissioner Inland Revenue wherein the income of the Company has been reassessed and certain expenses have been added back in the income for the above tax years. Tax impact of the above amounts to Rs. (thousand) 115,181 (2016: Rs. (thousand) 115,181). The Commissioner Inland Revenue (Appeals) has granted relief on certain additions made by assessing officer. Being aggrieved the Company has filed the appeals before the Appellate Tribunal Inland Revenue, which are pending adjudication. However, the tax department has also filed the appeals before the Appellate Tribunal Inland Revenue against the decisions decided in favor of the Company, which is also pending adjudication.

vi. The Company has filed an appeal before the Commissioner Inland Revenue (Appeals) against an order passed

under section 122(5A) of the Income Tax Ordinance, 2001 for the tax year 2014, by Additional Commissioner Inland Revenue wherein the income of the Company has been reassessed and certain expenses have been disallowed and added in the income for the year. Tax impact of the above amounts to Rs. (thousand) 138,670 (2016: Rs. (thousand) 138,670). The Commissioner Inland Revenue (Appeals) decided the appeal in favor of the Company. Federal board of revenue (FBR) has, however, filed an appeal before the Appellate Tribunal Inland Revenue, against this decision, which is pending adjudication.

vii. The Company has received an order under section 122(5A) of the Income Tax Ordinance, 2001 for the tax year 2009 passed by the Additional Commissioner Inland Revenue, wherein the income of the Company has been reassessed and certain expenses have been disallowed and added in the income resulting in tax impact of Rs. (thousand) 13,274 (2016: Rs. (thousand) 13,274). The Company has filed an appeal before the Commissioner Inland Revenue (Appeals), which was subsequently decided in favor of the Company. The Commissioner Inland Revenue has filed an appeal before the Appellate Tribunal Inland Revenue against this decision of the Commissioner Inland Revenue (Appeals), which is pending adjudication.

viii. The Company has received an order under section 122(5A) of the Income Tax Ordinance, 2001 in respect of tax

year 2010 passed by the Additional Commissioner Inland Revenue wherein the income of the Company has been reassessed and resulting tax impact of the additions amounting to Rs. (thousand) 1,766 (2016: Rs. (thousand) 1,766) has been added in the tax declared by the Company. Being aggrieved, the Company has filed an appeal before the Commissioner Inland Revenue (Appeals), which is pending adjudication.

ix. Based on the order passed under section 161 for the tax year 2011, an additional amount of Rs. (thousand) 9,936

(2016: Rs. (thousand) 9,936) was demanded by the Income Tax Department against which the Company filed an appeal before the Commissioner Inland Revenue (Appeals), which was subsequently decided in favor of the Company. The Commissioner Inland Revenue has filed an appeal before the Appellate Tribunal Inland Revenue against this decision of the Commissioner Inland Revenue (Appeals), which is pending adjudication.



21.2 Commitments

i. Commitments in respect of letters of credit established for the import of raw and packing materials, amounted to Rs. (thousand) 59,570 (2016: Rs. (thousand) 47,070).

ii. Counter-guarantees in favor of banks in the ordinary course of business, amounted to Rs. (thousand) 37,119 (2016:

Rs. (thousand) 32,023). iii. The amount of future payments under operating leases and the period in which these payments will become due

are as follows: Rupees in thousand

Note 2017 2016 Not later than one year 10,223 7,348 Later than one year and not later than five years 27,455 29,776 Later than five years 57,088 33,853

94,766 70,977

22 SALES - NET

Domestic 8,707,579 8,289,642 Export 184,302 168,289

8,891,881 8,457,931

Less: Discounts and incentives 233,280 222,803 Sales tax 1,498,997 1,418,186 Federal excise duty 589 402

1,732,866 1,641,391

22.1 7,159,015 6,816,540

22.1 This includes sales relating to trading activities amounting to Rs. (thousand) 10,353 (2016: Rs. (thousand) 6,246).

Rupees in thousand

Note 2017 2016

23 COST OF SALES

Manufacturing 23.1 5,075,501 4,927,234 Trading 23.2 8,249 4,542

5,083,750 4,931,776


Rupees in thousand

Note 2017 2016

23.1 Cost of sales - Manufacturing

Raw materials consumed:

Opening stock 89,508 109,609 Add: Purchases during the year 1,814,143 1,728,840 Less: Production of pulps, concentrates 551,413 513,643 Closing stock 89,203 89,508

1,263,035 1,235,298 Pulps, concentrates etc. consumed:

Opening stock 568,789 700,085 Add: Purchases during the year 491,775 246,898 Production/processing during the year 551,413 513,643 Less: Closing stock 689,941 568,789

922,036 891,837 Packing materials consumed:

Opening stock 359,714 434,321 Add: Purchases during the year 2,364,310 2,225,153 Less: Cost transferred to expenses 16,264 18,256 Closing stock 339,972 359,714

2,367,788 2,281,504 Factory expenses:

Salaries, wages and amenities 278,000 258,315 Company’s contribution to provident fund 1,380 1,375 Stores and spares consumed 59,144 80,051 Travelling and conveyance 3,158 2,995 Repairs and maintenance 131,155 120,563 Insurance 3,161 3,915 Fuel and power 206,391 204,016 Inward freight and loading/unloading 2,682 2,165 Utilities 18,127 14,924 Loss on disposal of empties 27.2 10,402 9,295 General expenses 4,783 7,104 Depreciation 5.3 123,069 127,310

841,452 832,028

Cost of production 5,394,311 5,240,667 Add: Finished goods - Opening stock 192,609 182,394

5,586,920 5,423,061 Less: Cost of samples 24.2 240,419 221,699 Cost of wastage and spoilage 26 67,958 81,519 Finished goods - Closing stock 203,042 192,609

511,419 495,827

5,075,501 4,927,234



Rupees in thousand

Note 2017 2016

23.2 Cost of sales - Trading

Finished goods - Opening stock 4,589 7,056 Add: Purchases during the year 10,963 4,282

15,552 11,338

Less: Cost of samples 24.2 399 437 Cost of wastage and spoilage 26 3,554 1,770 Finished goods - Closing stock 3,350 4,589

7,303 6,796

8,249 4,542

24 DISTRIBUTION COSTS

Salaries, wages and amenities 296,230 253,143 Company’s contribution to provident fund 1,815 1,766 Postage and telephone 2,699 2,329 Traveling and conveyance 30,602 33,667 Repairs and maintenance 24.1 51,198 36,903 Insurance 8,613 7,620 Utilities 9,476 7,758 Stationery and printing 1,187 1,684 Rent, rates and taxes 24,952 24,104 Advertising and promotions 24.2 508,953 606,987 Outward freight and distribution 129,123 125,244 Staff sales incentive 15,114 12,544 Petrol, oil and lubricants 72,944 66,709 General expenses 5,046 3,553 Depreciation 5.3 72,234 65,849

1,230,186 1,249,860 24.1 This include loss on disposal of shells amounting to Rs. (thousand) 7,461 (2016: Rs. (thousand) 3,749).

24.2 This include cost of samples amounting to Rs. (thousand) 240,818 (2016: Rs. (thousand) 222,136).

Rupees in thousand

Note 2017 2016

25 ADMINISTRATIVE EXPENSES

Salaries, wages and amenities 174,772 163,379 Company’s contribution to provident fund 2,097 2,041 Postage and telephone 3,222 2,301 Traveling and conveyance 5,218 4,111 Repairs and maintenance 14,741 14,714 Insurance 8,493 9,317 Utilities 6,269 6,265 Stationery and printing 5,315 5,063 Rent, rates and taxes 34,711 13,990 Auditors’ remuneration 25.1 3,923 3,706 Legal and professional 1,488 802 Donations 25.2 440 680 General expenses 6,408 7,366 Depreciation 5.3 11,632 10,556

278,729 244,291


Rupees in thousand

2017 2016

25.1 Auditors’ remuneration

Audit fee 1,200 1,150 Tax consultancy services 771 1,655 Miscellaneous certification and limited review charges etc. 1,550 600 Out of pocket expenses 402 301

3,923 3,706 25.2 Donations

None of the directors or their spouses had any interest in any of the donees.

Rupees in thousand

Note 2017 2016

26 OTHER OPERATING EXPENSES

Product spoilage 86,352 90,217 Barrel Depreciation 5.3 11,441 7,679 Royalty to related party - Shezan Services (Private) Limited 79,205 71,399 Workers’ Profit Participation Fund 19.3 19,472 10,920 Workers’ Welfare Fund 19.4 8,024 4,000 Loss on disposal of property, plant and equipment 27.2 627 603 Provision against doubtful debts 10.2 1,188 – Impairment of plant and machinery – 2,000

206,309 186,818

27 OTHER INCOME

Income from financial assets Profit on bank deposits 1,968 1,940 Dividend income 27.1 82 123 Foreign exchange gain-net 524 3,198

2,574 5,261 Income from non-financial assets Gain on disposal of property, plant and equipment 27.2 5,317 6,580 Sale of scrap 30,430 40,018

35,747 46,598

38,321 51,859

27.1 This represents dividend income earned on sharia permissible arrangement.


27.2 Gain / (Loss) on disposal of property, plant and equipment

Book Sale Gain / Description Cost Value Proceeds (loss) Purchaser / Party Mode

Rupees in thousand

Daihatsu Cuore 709 150 350 200 EFU General Insurance Insurance Claim Suzuki Ravi Pickup 539 140 231 91 Mateen Traders, Lahore Negotiation Suzuki Swift 1,262 583 556 (27) Irfan Ahmad, Ex-Employee Company’s Policy Hyundai Shehzore 708 105 675 570 EFU General Insurance Insurance Claim Inkjet Printer 465 214 234 20 Interlink Engineering, Lahore Negotiation Air Compressor 1,075 303 400 97 Rastgar Private Limited, Karachi Negotiation Straw Applicator 2,301 550 1,966 1,416 Dairy Engineering, Lahore Negotiation Empty bottles, shells, pallets and barrels 51,526 21,198 22,252 1,054 Various parties Negotiation Other assets with book value less than Rs. (thousand) 50. 2,800 147 2,043 1,896 Various parties Negotiation

61,385 23,390 28,707 5,317 Less: Loss on disposal of empties, shells and pallets transferred to: Cost of sales 28,495 10,402 - (10,402) Distribution cost 17,186 7,461 - (7,461) Other operating expenses 1,976 627 - (627)

47,657 18,490 - (18,490)

109,042 41,880 28,707 (13,173)

Rupees in thousand

Note 2017 2016

28 FINANCE COSTS

Interest / mark-up on:

Short-term borrowings 22,692 29,829 Workers' Profit Participation Fund 19.3 273 177 Long-term loan 10,425 19,317

33,390 49,323 Bank charges 3,029 2,855

36,419 52,178

29 TAXATION

Current tax: - Current year 116,131 62,648 - Prior years (6,309) (48,334)

109,822 14,314 Deferred tax:

- Relating to origination and reversal of temporary differences (4,959) (2,866) - Due to reduction in tax rates (2,238) (2,258)

(7,197) (5,124)

102,625 9,190

29.1 The Finance Act, 2017 introduced a tax on every public company at the rate of 7.5% of its accounting profit before tax that derives profit for a tax year but does not distribute at least 40% of its after tax profit within six months of the end of tax year through cash or bonus shares. The above provision is applicable from tax year 2017 and onwards.



Based on the above, the Board of Directors of the Company has proposed a dividend amounting to Rs. (thousand) 107,811 in their meeting held on 26 September 2017 for the financial and tax year 2017, which met the prescribed minimum dividend requirement as referred above. The Company believes that it would not be liable to pay tax on its undistributed reserves as of 30 June 2017.

Rupees in thousand

2017 2016

29.2 Relationship between income tax expense and accounting profit

Profit before taxation 361,943 203,476 Tax at the applicable rate of 31% 112,202 65,112 Effect of prior years tax (6,309) (48,334) Tax effect of expenses not allowed for tax purposes 136 843 Tax effect of applicability of lower tax rate on export sales and dividend income (582) (771) Tax effect of rebates and tax credits (3,323) (6,131) Tax effect of change in applicable rates and others 501 (1,529)

Tax charge for the current year 102,625 9,190

Rupees in thousand

2017 2016

30 EARNINGS PER SHARE - BASIC AND DILUTED

Net profit after tax 259,318 194,286 Number of shares

Weighted average number of ordinary shares at the end of the year (in thousand) 7,986 7,986 Rupees per share

Earnings per share - (basic and diluted) 32.47 24.33

30.1 No fully diluted earnings per share has been disclosed, as the Company has not issued an instrument which would have an impact on earnings per share, when exercised.

31 CAPACITY AND PRODUCTION

Normal Annual Capacity Actual Production

2017 2016 Bottling plant 6,000,000 Crates 5,538,150 5,156,540 Tetra Pak plant 31,100,000 Dozens 31,459,485 30,325,341 Squashes and syrups plant 1,177,500 Dozens 304,717 321,660 Jams and ketchup plant 4,140,660 Dozens 3,066,084 3,639,025 Pickles plant 262,500 Dozens 116,407 98,871 Canning plant 167,200 Dozens 78,296 102,676

The normal annual capacity, as shown above, has been worked out on the basis of 350 working days (2016: 350 working

days) except for bottling plant and squashes and syrups plant, which have been worked out on 150 days because of the seasonal nature of the business of the Company.

The variance between normal and actual production is because of the changes in demand and supply conditions along

with impact of weather on consumer preferences.



32 REMUNERATION OF CHIEF EXECUTIVE, PAID DIRECTORS AND EXECUTIVES

Chief Executive Directors Executives

2017 2016 2017 2016 2017 2016

Total number 1 1 1 1 17 14

Rupees in thousand

Basic salary 3,000 2,640 3,600 3,360 16,947 15,922 Provident fund contribution 250 220 300 280 1,412 1,327 Allowances and benefits House rent 744 744 744 744 5,391 5,301 Dearness 678 678 678 678 9,318 9,152 Special 780 600 780 600 1,093 1,050 Utilities 480 348 480 348 3,008 2,238 Medical – 7 – – 1,054 984 Bonus 750 440 900 560 4,200 2,799 Ex-gratia 250 220 300 280 2,719 1,146

6,932 5,897 7,782 6,850 45,142 39,919

32.1 Fees paid to six non-executive directors during the year, for attending Board meetings was Rs. (thousand) 350 (2016: Rs. (thousand) 350).

32.2 Fees paid to four non-executive directors during the year (2016: three non-executive directors) for attending Audit Committee meetings was Rs. (thousand) 300 (2016: Rs. (thousand) 200).

32.3 Fees paid to two non-executive directors during the year (2016: three non executive directors), for attending Human Resource Committee meetings was Rs. (thousand) 100 (2016: Rs. (thousand) 75).

32.4 The Company also provides the Chief Executive, certain directors and executives with Company maintained vehicles, partly for personal and partly for business purposes.

33 TRANSACTIONS WITH RELATED PARTIES

The related parties and associated undertakings comprise related group companies, associates, staff provident fund,

directors and key management personnel. Transactions with related parties and associated undertakings, other than

remuneration and benefits to key management personnel under the terms of their employment are as follows: 2017

Shahtaj Shahtaj Shahnawaz Shezan Shezan Shahnawaz Information Nawazabad Staff Total Sugar Textile Engineering Service Ampls (Private) System Farms Provident Mills Mills (Private) (Private) Limited Associates Fund Limited Limited Limited Limited Limited

Rupees in thousand Associated Companies

Purchases of raw materials 537,498 – – – – – – – – 537,498 Sales of finished goods 436 200 1 – 21 98 – 2 – 758 Royalty charged – – – 79,205 – – – – – 79,205 Purchases/repairs of electric equipment/vehicles – – – – – 355 – – – 355 Services rendered – – – – – – – – – – Employee Retirement Fund

Contributions to staff provident fund – – – – – – – – 5,292 5,292

537,934 200 1 79,205 21 453 - 2 5,292 623,108


2016

Shahtaj Shahtaj Shahnawaz Shezan Shezan Shahnawaz Information Nawazabad Staff Total Sugar Textile Engineering Service Ampls (Private) Systems Farms Provident Mills Mills (Private) (Private) Limited Associates Fund Limited Limited Limited Limited Limited

Rupees in thousand Associated Companies

Purchases of raw materials 834,009 – – – – – – – – 834,009 Sales of finished goods 433 326 4 - 31 102 – – – 896 Royalty charged – – - 71,399 – – – – – 71,399 Purchases/repairs of electric equipment/vehicles – – – – – 336 9 – – 345 Services rendered – – – – – - 500 – – 500 Employee Retirement Fund

Contributions to staff provident fund – – – – – – – – 5,182 5,182

834,442 326 4 71,399 31 438 509 – 5,182 912,331

34 PROVIDENT FUND TRUST

The Company has maintained an employees provident fund trust and investments out of the provident fund has been made in accordance with the provisions of section 227 of the Companies Ordinance, 1984, and the rules formulated for this purpose. The salient information of the fund is as follows:

Rupees in thousand

Note 2017 2016

Size of the fund 182,256 163,303Percentage of the investments made 99.2% 99.8%Fair value of Investments 34.1 180,803 163,021Cost of Investments made 173,599 162,194

Break-up of the investments in terms of amount and percentage of the size of the provident fund are as follows:

Investment Investment as a % of size of the fund Rupees in thousand

2017 2016 2017 2016

34.1 Breakup of investment

Listed securities and mutual fund units 15.2% 13.5% 27,775 22,117 Placements/certificates 70.6% 85.4% 128,609 139,419 Cash at PLS saving accounts 13.4% 0.9% 24,419 1,485

99.2% 99.8% 180,803 163,021

34.2 Current year figures are based on un-audited financial statements of the Provident Fund Trust.

No. of Persons

2017 2016

35 NUMBER OF EMPLOYEES

Number of permanent persons employed are as follows: Total employees 304 300Average employees 303 304



36 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

The main risks arising from the Company’s financial instruments are credit risk, liquidity risk, foreign currency risk, interest rate risk and equity price risk. The management reviews and agrees policies for managing each of these risks which are summarised below. 36.1 Credit risk

Credit risk is the risk which arises with the possibility that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. The Company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific counter parties and continually assessing the creditworthiness of counter parties. The Company does not believe it is exposed to major concentration of credit risk, however to manage any possible exposure the Company applies approved credit limits to its customers.

The management monitors and limits Company’s exposure to credit risk through monitoring of client’s credit exposure review and conservative estimates of provisions for doubtful receivables.

The Company is exposed to credit risk on long-term deposits, trade debts, advances, deposits, other receivables

and bank balances. The Company seeks to minimize the credit risk exposure through having exposures only to customers considered credit worthy and obtaining securities where applicable. The maximum exposure to credit risk at the reporting date is:

Carrying Values Rupees in thousand

2017 2016 Long-term deposits 5,183 4,253 Trade debts - unsecured 259,853 269,494 Loans and advances 5,626 5,763 Trade deposits 11,463 10,698 Bank balances 39,196 52,829 Cheques in hand 20,698 18,665 Interest accrued 338 268

342,357 361,970 The credit quality of financial assets can be assessed by reference to external credit ratings or the historical

information about counter party defaults as shown below:

Rupees in thousand

2017 2016

36.1.1 Trade Debts

Neither past due nor impaired 78,262 100,036 Past due but not impaired 31 - 60 days 91,760 54,225 61 - 180 days 37,452 41,033 181 - 365 and Above 52,379 74,200

181,591 169,458

259,853 269,494

Geographically:

Pakistan 214,686 201,559 Australia – 802 North America – 3,184 Europe 14,165 8,223 Africa 31,002 55,726

259,853 269,494


As at 30 June 2017, the Company has 5 customers (2016: 5 customers) that owed Rs. (thousand) 174,810 (2016: Rs. (thousand) 162,761) and accounted for 67% (2016: 60%) of all receivables owed.

As at 30 June 2017, trade debts of Rs. (thousand) 1,374 (2016: Rs. (thousand) 1,350) were impaired and provided for.

Rating Rupees in thousand

36.1.2 Cash at Bank Rating Agency Short term Long term 2017 2016 Banks

United Bank Limited JCR-VIS A-1+ AAA 2,634 1,552 The Bank of Khyber PACRA A1 A 1,630 1,216 Bank AL-Habib Limited PACRA A1+ AA+ 18,382 20,256 National Bank of Pakistan PACRA A1+ AAA 4,152 251 MCB Bank Limited PACRA A1+ AAA 398 6 Bank Islami Pakistan Limited PACRA A1 A+ – 48 HBL Pakistan JCR-VIS A-1+ AAA 11,180 29,267 Bank Alfalah Limited PACRA A1+ AA+ 820 233 Cheques in hand 20,698 18,665

59,894 71,494

36.2 Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its commitments associated with financial liabilities when they fall due. Liquidity requirements are monitored regularly and management ensures that sufficient liquid funds are available to meet any commitments as they arise.

Financial liabilities are analysed below, with regard to their remaining contractual maturities. 2017

Maturity Upto Maturity After One Year One Year Total

Rupees in thousand Long-term loan - secured 90,000 – 90,000 Short-term borrowings - secured 292,525 – 292,525 Trade and other payables 541,760 – 541,760 Mark up accrued on borrowings 1,584 – 1,584

925,869 – 925,869 2016

Maturity Upto Maturity After One Year One Year Total

Rupees in thousand

Long-term loan - secured 120,000 90,000 210,000 Short-term borrowings - secured 226,277 – 226,277 Trade and other payables 493,040 – 493,040 Mark up accrued on borrowings 1,454 – 1,454

840,771 90,000 930,771



36.3 Market Risk

36.3.1 Currency Risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the export of its products and import of some chemicals. The Company does not view hedging as financially viable considering the materiality of transactions.

Sensitivity analysis

With all other variables remain constant, a 1% change in the rupee dollar parity existing at 30 June 2017 would have affected the profit and loss account and liabilities and equity by Rs. (thousands) 435 (2016: Rs. (thousands) 679).

36.3.2 Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rate will affect the value of financial instruments. The Company is exposed to interest rate risk for long-term loan, short-term borrowings and bank deposits, which have been disclosed in the relevant note to the financial statements.

Sensitivity analysis

If interest rates at the year end, fluctuate by 100 basis points higher / lower, profit for the year would have been Rs. (thousand) 3,612 (2016: Rs. (thousand) 4,150) higher / lower. This analysis is prepared assuming that all other variables held constant and the amounts of liabilities outstanding at the balance sheet dates were outstanding for the whole year.

36.4 Capital Management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholders’ value. The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions. Capital includes ordinary share capital and reserves.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to

shareholders or issue of new shares. Consistent with industry norms, the Company monitors its capital on the basis of gearing ratio. The ratio is calculated

as net debt divided by total capital. Net debt is calculated as total borrowings as shown in the balance sheet less cash and cash equivalent. Total capital is calculated as ‘equity ‘ as shown in the balance sheet plus net debt (as defined above).

The Company finances its operations through equity, short-term borrowing and managing working capital. Gearing ratio

Rupees in thousand

2017 2016

Net Debt

Long-term loan - secured 90,000 210,000 Short-term borrowings 292,525 226,277 Cash and bank balances (73,227) (102,906)

309,298 333,371

Total Equity 2,022,705 1,834,365 Total Capital 2,332,003 2,167,736

Gearing (%) 13% 15% The Company is not subject to any externally imposed capital requirements.


36.5 Fair value of financial instruments

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:

Fair value is determined on the basis of objective evidence at each reporting date.

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair values are observable either, directly or indirectly.

Level 3: Techniques which uses inputs that have a significant effect on the recorded fair value that are not based on observable market data.

At 30 June, the Company had following financial instruments with respect to their level of fair value modelling. Fair value is determined on the basis of objective evidence at each reporting date. Level 1 Level 2 Level 3

Rupees in thousand

2017

Investment - available for sale 2,877 – –

2016

Investment - available for sale 2,121 – –



37 SEGMENTAL ANALYSIS

Operating segments are reported in a manner consistent with the internal reporting provided tom the Chief Operating Decision Maker. The Chief Operating Decision Maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive. The Chief Executive considers the business from the product perspective and evaluates performance on the basis of their profit or loss. As at 30 June 2017 the Company is organized into two operating segments based on their products.

Juice drinks activities

Juice drinks activities include bottled as well as juices in tetra pak packings. Other operating activities

Other operating activities include pickles, ketchup, sauces, jams etc. Segment analysis of profit and loss account for the year ended 30 June 2017:

Juices and

Drinks Others Total

Rupees in thousand

Sales 5,943,728 1,215,287 7,159,015Cost of sales (4,128,264) (955,486) (5,083,750)

Gross profit 1,815,464 259,801 2,075,265Unallocated expenses and income Corporate expenses (1,508,915) Finance costs (36,419) Other operating expenses (206,309) Other income 38,321 Taxation (102,625)

Profit after taxation 259,318 Segment analysis of assets and liabilities as at 30 June 2017:

Juices and

Drinks Others Total

Rupees in thousand

Segment assets 2,486,147 538,742 3,024,889

Unallocated assets 498,507

Total 3,523,396

Segment liabilities 562,067 180,381 742,448

Unallocated liabilities 758,243

Total 1,500,691


Segment analysis of profit and loss account for the year ended 30 June 2016:

Juices and

Drinks Others Total

Rupees in thousand

Sales 5,612,547 1,203,993 6,816,540 Cost of sales (3,993,092) (938,684) (4,931,776)

Gross profit 1,619,455 265,309 1,884,764 Unallocated expenses and income Corporate expenses (1,494,151) Finance costs (52,178) Other operating expenses (186,818) Other income 51,859 Taxation (9,190)

Profit after taxation 194,286

Segment analysis of assets and liabilities as at 30 June 2016:

Juices and

Drinks Others Total

Rupees in thousand

Segment assets 2,265,572 504,129 2,769,701

Unallocated assets 498,057

Total 3,267,758

Segment liabilities 588,565 193,981 782,546

Unallocated liabilities 650,847

Total 1,433,393

38 DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue by the Board of Directors on 26 September 2017. 39 EVENTS AFTER THE BALANCE SHEET DATE

The Board of Directors have proposed a final dividend of Rs. 13.50/- per share, amounting to Rs. (thousand) 107,811 for the year ended 30 June 2017 (2016: Rs. (thousand) 71,874) along with transfer to general reserve amounting to Rs. (thousand) 200,000 (2016: Rs. (thousand) 150,000) at their meeting held on 26 September 2017 for approval of the members at the Annual General Meeting to be held on 27 October 2017.

40 GENERAL

Corresponding figures of stores and spares consumed amounting to Rs. (thousand) 84,777 have been reclassified to repairs and maintenance amounting to Rs. (thousand) 22,549 and fuel and power amounting to Rs. (thousand) 62,228 within factory expenses presented under cost of sales (Note 23.1).



I/We,

of

being a Member(s) of Shezan International Limited holding

ordinary shares hereby appoint

of

or failing him

of

who is also a Member of Shezan International Limited as my/our Proxy in my/our absence to attend and vote for me/us and on my/our behalf at the 54th Annual General Meeting of the Company to be held on 27 October 2017 and at any adjournment thereof.

As witness my/our hand/seal this day of 2017.

Signed by

in the presence of

Important notes:

1. No person shall act as proxy unless he himself is member of the Company, except that a corporation may appoint a person who is not a member.

2. If a member appoints more than one proxy and more than one instruments of proxy are deposited by a member with the Company, all such instruments of proxy shall be rendered invalid.

3. Proxies, in order to be valid must be received at the Registered Office of the Company, Shezan International Limited, 56 Bund Road, Lahore, not less than 48 hours before the meeting.

4. CDC Shareholders and their proxies, both are requested to attach an attested photocopy of their Computerised National Identity Card (CNIC) or Passport with the proxy form before submission to the Company (Original CNIC / Passport is required to be produced at the time of the meeting).

5. In case of Corporate entity, the Board of Directors' resolution / power of attorney with specimen signature shall be submitted (unless it has been provided earlier) along with proxy form to the Company.

Folio Number / CDC A/C Number Signature

This signature should agree with the specimen registered with the Company.

Affix Rs. 5/-revenue stamp

SHEZAN INTERNATIONAL LIMITEDPROXY FORM

59

56 - Bund Road, Lahore - 54500.(042) 37466900-04.(042) 37466899 & [email protected]

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